Which of the Following Is Cited as a Good Reason

question 38

Multiple Choice

Which of the following is cited as a good reason for NOT hedging currency exposures?

• A) Shareholders are more capable of diversifying risk than management.
• B) Currency risk management through hedging does not increase expected cash flows.
• C) Hedging activities are often of greater benefit to management than to shareholders.
• D) All of the above are cited as reasons NOT to hedge.

Analyze the effects of operational changes on a firm's operating cycle.

Calculate and interpret the cash cycle in various scenarios.

Understand the impact of discounts on operating cycles and payment periods.

Calculate and analyze the effects of changes in accounts payable periods due to discounts.

---

Definitions:

Consumer Surplus

The variance between the sum consumers are willing to pay for a good or service and the amount they truly pay.

Willingness to Pay

The maximum amount an individual is prepared to spend on a good or service, reflecting the value they assign to it.

Consumer Surplus

The gap between the sum consumers are ready and able to spend on a good or service and what they really pay for it.

Normal Goods

Goods for which demand increases as consumer income rises.