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:

Primary Consideration

The most important factor to be thought of or taken into account in a particular situation or decision-making process.

Victim Crisis

A situation in which an individual or group experiences significant harm or distress, prompting an immediate need for support and intervention.

Product Tampering

The unauthorized alteration or contamination of a product before it reaches the consumer, raising safety and trust issues.

Inductive Outline

A framework for presenting information that starts with specific observations and moves towards a general conclusion.