Besides Speculation, What Is Another Reason Risk Managers May Employ

question 1

Multiple Choice

Besides speculation, what is another reason risk managers may employ stack and roll hedging strategies?

• A) Near term contracts have more volume
• B) Commodity prices are more attractive
• C) Arbitrage usually exists
• D) Mispricing occurs frequently at long term maturities

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Definitions:

Going Concern

An assumption that a company will continue to operate in the foreseeable future, without the intention or necessity of liquidation.

Financial Restructuring

The process of reorganizing a company's financial structure through various means, including changing the mix of debt and equity.

Capital Structure

The mixture of debt and equity that a company uses to finance its operations and growth.

Tax Shield

The reduction in income taxes that result from taking a deductible expense, such as mortgage interest, which reduces taxable income.