If Managers Are Rational, They Will Only Hedge When They

question 73

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:

Rubber-Tipped

Rubber-tipped refers to a tip or cover made of rubber material, commonly used on tools or devices to provide protection, grip, or as a non-conductive or non-scratch surface.

Musculoskeletal System

This system includes bones, muscles, cartilage, tendons, ligaments, joints, and other connective tissues that support and bind tissues and organs together, playing a central role in maintaining form and movement.

Fractured Bones

Breaks or cracks in bones, a common injury that can vary in severity and type, requiring different treatments depending on the nature of the fracture.

Diseased Joints

Joints affected by conditions or illnesses, resulting in pain, inflammation, and decreased mobility.