Why Does Hedging Reduce the Firm's Expected Taxes and Increase

question 24

Multiple Choice

Why does hedging reduce the firm's expected taxes and increase its value?

• A) It creates a tax-loss carry-forward.
• B) It separates production costs from headquarters' costs.
• C) It provides the firm with additional expenses reducing taxable income.
• D) It allows the firm to shift income across different tax jurisdictions in the world.

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