Assuming No Transaction Costs (I

question 26

Multiple Choice

Assuming no transaction costs (i.e., hedging is "free") , hedging currency exposures should ________ the variability of expected cash flows to a firm and at the same time, the expected value of the cash flows should ________.

• A) increase; not change
• B) decrease; not change
• C) not change; increase
• D) not change; not change

Understand the concept of reinforcement value and its role in determining preferences for events according to Rotter.

Comprehend Lewin's field theory, including the impact of force fields on behavior within a given field.

Grasp the significance of cognitive maps and the learning-performance distinction in Tolman's theory.

Differentiate between central and peripheral needs as defined by Lewin and understand the implications for motivation.

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Definitions:

Fixed Costs

Expenses that do not vary with production volume or business activity level, such as rent, salaries, and insurance premiums.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating the extent to which a firm uses fixed versus variable costs.

Variable Cost

Costs that change in proportion to the level of output or activity in a business.

Fixed Costs

Costs that do not vary in proportion to the level of goods or services produced by a business, such as rent, salaries, and insurance premiums.