A Hedge Between Which Two of the Following Firms Is

question 18

Multiple Choice

A hedge between which two of the following firms is most apt to reduce each firm's financial risk exposure?

• A)wheat farmer and bakery
• B)oil producer and coal miner
• C)wheat grower and pharmaceutical firm
• D)pastry bakery and cotton farmer
• E)shoe manufacturer and coat manufacturer

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Definitions:

Financial Performance

An assessment of how well a company can use assets from its primary mode of business and generate revenues.

Dividend Yield Ratio

A financial ratio that shows how much a company pays out in dividends each year relative to its stock price, often expressed as a percentage.

Market Price

The present cost at which a service or asset is available for purchase or sale.

Asset Turnover

A financial ratio that measures the efficiency of a company's use of its assets in generating sales revenue, indicating how effectively assets are utilized.