Which One of the Following Is Not Generally Considered a Benefit

question 11

Multiple Choice

Which one of the following is not generally considered a benefit of hedging?

• A) Hedging reduces business risk.
• B) Hedging allows prices to be locked in ahead of time.
• C) Hedging can be very profitable.
• D) Hedging can stabilize profits.

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Definitions:

Profitability

Profitability is a measure of the efficiency and financial success of a business or project, indicated by the ability to generate income greater than its expenses and costs.

Times Interest Earned

Times interest earned is a financial ratio that measures a company's ability to meet its debt obligations by comparing its income before interest and taxes to its interest expenses.

Interest Expense

The cost of borrowing money.

Income Tax Expense

The cost associated with income taxes owed to federal, state, or local governments, recognized in the accounting period in which the income was earned.