Which of the Following Statements About Hedging of Business Risks

question 32

Multiple Choice

Which of the following statements about hedging of business risks by investors is (are) correct?
I. Operational information about companies is widely available and investors find it relatively simple to hedge business risk.
II. Investors have the necessary capital required to implement hedging strategies and do so consistently.

• A) Only statement I is correct.
• B) Only statement II is correct.
• C) Both statements I and II are correct.
• D) Neither statement I nor II is correct.

---

Definitions:

Fair Value

The estimated market price of an asset or liability, reflecting the amount at which it could be bought or sold in a current transaction between willing parties.

Relevant Information

Relevant information comprises data that is applicable and helpful in making decisions, particularly in the context of financial and managerial accounting.

Qualitative Characteristic

Attributes that make the information provided in financial statements useful to users, including relevance, understandability, comparability, and reliability.