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

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Definitions:

Memory

An essential component of computers and other devices, used to store data temporarily or permanently, for the system to access and process information.

PLC Manufacturers

Companies that design and produce Programmable Logic Controllers used in industrial control applications.

Memories

Storage areas within a computer or PLC used to hold program instructions, operational data, and other information.