Which of the Following Statements Is True Companies Hedging Behavior

question 35

Multiple Choice

Which of the following statements is true companies hedging behavior?

• A)Managers hedge because they are diversified.
• B)Hedging can increase debt capacity.
• C)Unregulated companies are found to hedge more than regulated ones.
• D)Managers want to increase expected bankruptcy costs.
• E)Managers hedge because owners are undiversified.

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Definitions:

Complementary Goods

Products or services that enhance or are necessary for the use of another product, such as printers and ink cartridges.

Generic Goods

Products that are not branded and are sold without any trademark or logo. They are typically characterized by lower prices and are considered equivalent in quality to branded products in many cases.

Brand Extension

involves the use of an established brand name on a new product in a different category, leveraging the brand's existing recognition and goodwill to introduce new offerings.

Line Extension

The process of introducing new items in the same product category under the same brand name, often with new flavors, sizes, colors, or ingredients.