Which of the Following Statements Related to a Corporation Hedging

question 12

Multiple Choice

Which of the following statements related to a corporation hedging in the real world is INCORRECT?

• A) Corporations should not hedge because a shareholder can always replicate such policies themselves trading related securities.
• B) In case a decision is made to hedge,corporations can do it at lower transaction costs than shareholders can.
• C) A company hedge is often better than a shareholder's hedge because companies can dedicate competent personnel to hedging.
• D) A company can hedge by issuing a whole range of securities that individuals cannot create on their own.
• E) A company can hedge for strategic reasons that may lie beyond an ordinary shareholder's knowledge.

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Definitions:

Transportation Requirements

Specifications or conditions that need to be met for the movement of goods or people, including mode of transport, capacity, timing, and infrastructure needs.

Graphic Device

Hardware used to create, display, or manage visual content, such as a graphics card in a computer.

Uncertainty

The state of being unsure about the outcome of an event or the veracity of a fact.

Indifferent

A state of neutrality or lack of preference between two or more choices or outcomes.