By Hedging Financial Risk,a Firm Can

question 60

Multiple Choice

By hedging financial risk,a firm can:

• A)ensure a steady rate of return for its shareholders.
• B)eliminate price changes over the long-term.
• C)ensure its own economic viability.
• D)gain time to adapt to changing market conditions.
• E)eliminate its exposure to price increases in raw materials.

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Definitions:

Degrees of Freedom

The number of independent values in a statistical calculation that can vary without violating any constraints applied to them.

Chi-Squared Distribution

A statistical probability distribution which is the result of summing the squares of k independent standard normal variables.

Confidence Interval

A range of values used to estimate the true value of a population parameter with a certain level of confidence.

Population Standard Deviation

A measure of the amount of variation or dispersion present in a set of values within an entire population.