Which of the Following Is NOT Cited as a Good

question 23

Multiple Choice

Which of the following is NOT cited as a good reason for hedging currency exposures?

• A) Reduced risk of future cash flows is a good planning tool.
• B) Reduced risk of future cash flows reduces the probability that the firm may not meet required cash flows.
• C) Currency risk management increases the expected cash flows to the firm.
• D) Management is in a better position to assess firm currency risk than individual investors.

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Definitions:

Income Statement

A financial statement that shows a company's financial performance over a specific accounting period, detailing revenues, expenses, and net income.

Contribution Margin

The difference between sales revenue and variable costs of a product or service, indicating how much contributes towards covering fixed costs and generating profit.

Gross Margin

A financial measurement that calculates the difference between a company’s total revenue and the cost of goods sold, expressed as a percentage of total revenue.

Variable Costing

An accounting method that records variable costs (costs that change with production levels) as product costs, while fixed costs are recorded as expenses in the period they are incurred.