Which of the Following Is True of the Hedging Effects

question 11

Multiple Choice

Which of the following is true of the hedging effects on stakeholders?

• A)Hedging reduces volatility without increasing firm value and transfers value from debt holders to equity holders.
• B)A firm's bankers and bondholders would certainly like the firm to hedge.
• C)Managers who look out for the interests of their employees have no incentive to hedge.
• D)The interests of most of a firm's employees are closer to the interests of equity holders than of debt holders.

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Definitions:

Social Psychologists

Researchers who study how individuals think, feel, and behave in social contexts, examining the influence of interpersonal and group dynamics.

Reinforcement Theory

The proposition that people and animals will perform behaviors that have been rewarded more than they will perform other behaviors.

Social Allergy Effect

The idea that a partner’s annoying habits become more annoying over time.

Demographics

Pertains to statistical data relating to the population and particular groups within it, including factors like age, gender, income, and education.