Which of the Following Is True of the Impact of Hedging

question 10

Multiple Choice

Which of the following is true of the impact of hedging on executive compensation contracts?

• A)A well-designed compensation package will leave a risk-averse executive exposed to risk.
• B)Hedging restricts the managers to take riskier but high return projects.
• C)A firm will be able to evaluate its executives more accurately by implementing a hedging programme.
• D)Hedging can increase risk and penalize the executives for a decline in profits of the project.

---

Definitions:

Irritable

Easily annoyed or provoked to anger or frustration.

Difficult

Challenging or requiring substantial effort to accomplish, understand, or endure.

Identity Formation

The development process by which an individual constructs a sense of self or identity, influenced by personal experiences and societal factors.

Cross-Sectional

Cross-Sectional refers to a type of observational study that analyzes data from a population, or a representative subset, at a specific point in time.