A Manager Arguing Against Currency Hedging Would Most Likely Argue

question 72

Multiple Choice

A manager arguing against currency hedging would most likely argue that _____.

• A) currency hedging eats into company profits 
• B) currency hedging leaves firms at the mercy of the spot market 
• C) currency hedging decreases stability of cash flows and earnings 
• D) currency hedging is mainly a practice of very large MNEs

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Definitions:

Sunk Costs

Costs that have already been incurred and cannot be recovered, and should not affect future decision-making processes.

Discrimination Learning

A cognitive process where an organism learns to respond differently to various stimuli because they are associated with different outcomes.

Negative Reinforcement

A conditioning process where a negative (aversive) stimulus is removed after a particular behavior is exhibited, increasing the likelihood of that behavior occurring again.

Classical Conditioning

A learning process in which a neutral stimulus becomes associated with a meaningful stimulus and acquires the capacity to elicit a similar response.