When Firms Use Derivatives Effectively to Manage Risks,the Net Gain

question 50

Short Answer

When firms use derivatives effectively to manage risks,the net gain or loss each period should be relatively ____________________.

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Definitions:

Additional Government Borrowing

The process by which the government incurs more debt through issuing bonds or taking loans to finance its expenditure beyond its income.

Higher Taxes

Refers to increased charges imposed by governments on individuals or entities' income, activities, or transactions.

U.S. Treasury Bonds

Long-term government debt securities issued by the United States Department of the Treasury with a maturity of more than 10 years.

Foreign Stock

refers to shares of a company based outside the investor's own country.