If Managers Are Rational, They Will Only Hedge When They

question 85

Multiple Choice

If managers are rational, they will only hedge when they perceive that:

• A)prices are headed in an adverse direction.
• B)derivative instruments are priced lower than actual value.
• C)risk reduction is preferable to higher potential profits.
• D)they can increase their profitability by doing so.

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Definitions:

Right Half

An ambiguous term potentially referring to the right side of a bilateral organism or structure, requiring context for precise definition.

Cerebrum

The biggest section of the brain, tasked with managing voluntary muscle movements, sight, language, flavor, auditory perception, cognition, and memory retention.

Subarachnoid Space

The space between the arachnoid membrane and pia mater around the brain and spinal cord, filled with cerebrospinal fluid.

Dural Venous Sinus

A channel through which venous blood drains from the brain and meninges back towards the heart.