Which of the Following Is True

question 2

Multiple Choice

Which of the following is true?

• A) Hedging can always be done more easily by a company's shareholders than by the company itself
• B) If all companies in an industry hedge, a company in the industry can sometimes reduce its risk by choosing not to hedge
• C) If all companies in an industry do not hedge, a company in the industry can reduce its risk by hedging
• D) If all companies in an industry do not hedge, a company is liable increase its risk by hedging

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Definitions:

High Deductible Health Plan

A High Deductible Health Plan (HDHP) is a health insurance plan with lower premiums and higher deductibles than a traditional health plan, often linked to Health Savings Accounts (HSAs).

Health Savings Account

An account that allows individuals with high-deductible health plans to save money tax-free for medical expenses.

Out-Of-Pocket Expenses

Costs that an individual must pay out of their own cash reserves, including medical expenses, business expenses not reimbursed, and other personal expenditures.

Self-Employed Health Insurance

A deduction that allows self-employed individuals to deduct 100% of their health insurance premiums from their taxable income.