Firms That Use Maturity Hedging as a Guide to Financing

question 1

Multiple Choice

Firms that use maturity hedging as a guide to financing policy:

• A) try to hedge with futures contracts.
• B) hold excess cash balances to reduce risk.
• C) will finance long term assets with long term financing.
• D) rely on government policy to keep interest rates low.

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Definitions:

Obscure

Difficult to understand or unclear due to being complex or not explicitly stated.

Cessation

The process of bringing or coming to an end; a halt or cessation.

Finitude

The quality or condition of having limits or bounds.

Trepanning

An ancient medical procedure that involves drilling a hole into the human skull for therapeutic or surgical purposes.