Good reasons for not hedging currency exposures

Assignment Help Financial Management
Reference no: EM131933672

1. Which of the following are cited as good reasons for NOT hedging currency exposures?

A. Hedging activities are often of greater benefit to management than to shareholders.

B. Currency risk management through hedging does not increase expected cash flows.

C. Shareholders are more capable of diversifying risk than management.

D. Management is in a better position to assess firm currency risk than individual investors.

2. Hedging _____ the distribution of net cash flows about the mean of the distribution, but it ___ the mean itself.

A. narrows / doesn't change

B. narrows / decreases

C. widens / doesn't change

D. widens / raises

Reference no: EM131933672

Questions Cloud

Five circumstances under which monetary policy instruments : Discuss five circumstances under which the monetary policy instruments may not be effective in controlling money supply.
Gains or losses caused by translation adjustments : Gains or losses caused by translation adjustments when using the temporal method are ________.
Statements about risk management is incorrect : Which of the following statements about risk management is incorrect?
Equation for projecting the trend of NPMs annual receipts : Evaluate the coefficients of a linear regression equation for projecting the trend of NPM’s annual receipts for 1990 to 1997.
Good reasons for not hedging currency exposures : Which of the following are cited as good reasons for NOT hedging currency exposures?
Exposure in forward market at the available forward rate : DLK chooses to hedge its transaction exposure in the forward market at the available forward rate.
American firm wants to eliminate its quotation exposure : If an American firm wants to eliminate its quotation exposure, it should ___
The two requirements for transaction exposure are : The two requirements for transaction exposure are.
What will be optimal cash return point : The trading cost per sale or purchase of marketable securities to be $140 per transaction. What will be its optimal cash return point?

Reviews

Write a Review

Financial Management Questions & Answers

  Sales increase-having to raise funds externally

Pierce Furnishings generated $2 million in sales during 2012, and its year-end total assets were $1.4 million. Also, at year-end 2012, current liabilities were $500,000, consisting of $200,000 of notes payable, $200,000 of accounts payable, and $100,..

  What will the operating cash flow be if output falls

At an output level of 15,000 units, you have calculated that the degree of operating leverage is 1.75. The operating cash flow is $28,500 in this case. What will the operating cash flow be if output rises to 17,000 units? What will the operating cash..

  What is the net present value of this project

You are analyzing a project with a 30-year lifetime, with the following characteristics: The project will require an initial investment of $20 million and additional investment of $5 million in year 10 and $5 million in year 20. What is the net prese..

  Explain the cash realization cycle

Explain the cash realization cycle. What roles does inventory turnover and receivables collection play in the realization of cash for a business?

  What is implication of result for cash management? decisions

Assuming a? 1-year, money market account investment at 4.38 percent? (APY), What is the implication of this result for cash management? decisions?

  What will be the likely disposition of the case

But then Johnny fails to make payments and the salesman sues Mark under the oral contract. What will be the likely disposition of the case?

  What should these shares be trading for today

A company issued preferred shares two years ago, paying a $3.85 dividend, which offered investors an original yield of 9%. Currently, the required return on companies with preferred shares of comparable risk yield 9%. Given this information, what sho..

  What is the dollar amount of your initial margin

BUYING ON MARGIN HOMEWORK SPRING 2017 Initial margin req. 0.50 Maintenance margin req. 0.30 Call rate 0.025 You buy 1,000 shares of Facebook on February 1, 2016 at $115 a share. What is the dollar amount of your initial margin?

  What is its new market value and stock value

Earley Corporation issued perpetual preferred stock with a 8% annual dividend. What is the stock's value? What is its new market value?

  Probably the best argument in favor of reverse stock split

Which one of the following is probably the best argument in favor of a reverse stock split?

  Determine whether the bond is bought at premium or discount

Determine whether the bond is bought at a premium or discount.

  Bond portfolio management strategy

Discuss rate anticipation swaps as bond portfolio management strategy. some of problems for investor who wishes to have internationally diversified portfolio.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd