One objective of risk management can be to reduce the volatility of a firm's cash flows.

Question

Quizplus · Accepted Answer

Risk management aims to identify and assess potential risks that can affect a firm's financial performance and develop strategies to minimize or mitigate those risks. One way to accomplish this is by reducing the volatility of a firm's cash flows, which can be achieved through hedging against fluctuations in interest rates, exchange rates, commodity prices, and other market risks. By stabilizing cash flows, firms can better manage their financial obligations, make informed investment decisions, and improve their overall financial health.

One Objective of Risk Management Can Be to Reduce the Volatility