Assuming No Transaction Costs (I

question 26

Multiple Choice

Assuming no transaction costs (i.e., hedging is "free") , hedging currency exposures should ________ the variability of expected cash flows to a firm and at the same time, the expected value of the cash flows should ________.

• A) increase; not change
• B) decrease; not change
• C) not change; increase
• D) not change; not change

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Definitions:

Medical Costs

Expenses associated with healthcare services, including diagnosis, treatment, and prevention of disease.

Health Benefits

Positive effects on physical and/or mental well-being obtained through particular lifestyle choices, medical treatments, or preventive measures.

Motives

The reasons or driving forces behind individuals' actions or behavior.

Motivational Principle

A fundamental truth about what motivates individuals to act in certain ways or pursue particular goals.