By hedging financial risk,a firm can:
A)ensure a steady rate of return for its shareholders.
B)eliminate price changes over the long-term.
C)ensure its own economic viability.
D)gain time to adapt to changing market conditions.
E)eliminate its exposure to price increases in raw materials.

Question

Quizplus · Accepted Answer

By hedging financial risk, a firm can gain time to adapt to changing market conditions. This means that the firm can take the necessary actions to adjust its operations and minimize the impact of adverse market conditions. Hedging does not necessarily ensure a steady rate of return for shareholders, eliminate price changes, ensure economic viability or eliminate exposure to price increases in raw materials.

By Hedging Financial Risk,a Firm Can