Assuming No Transaction Costs (I

question 26

Multiple Choice

Assuming no transaction costs (i.e., hedging is "free") , hedging currency exposures should ________ the variability of expected cash flows to a firm and at the same time, the expected value of the cash flows should ________.

• A) increase; not change
• B) decrease; not change
• C) not change; increase
• D) not change; not change

---

Definitions:

Null Hypotheses

A hypothesis that assumes no significant difference or effect exists between groups or variables being examined.

Factorial ANOVA

A statistical test used to evaluate the effects of two or more categorical independent variables on a single continuous dependent variable.

Weight Loss

The reduction of total body mass due to efforts such as diet, exercise, or surgery.