Managers Are Willing to Pay a Price to Hedge Because

question 78

Multiple Choice

Managers are willing to pay a price to hedge because:

• A) they receive increased profits in return.
• B) the returns on derivative instruments are not taxed.
• C) they value the reduction in uncertainty.
• D)it permits the managers to receive higher cash bonuses.

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Definitions:

Distributive process

A negotiation strategy concerned with the division and allocation of resources or benefits.

Integrative process

A negotiation strategy that seeks to find mutually beneficial solutions by integrating the interests and needs of all parties involved.

Interests and resources

Refers to the various desires, wants, or needs that individuals or groups pursue, along with the assets or capital at their disposal to achieve these ends.

Collaborative strategies

Approaches designed to work jointly with others towards achieving a common goal.