The hedging principle involves matching the cash flow from an asset with the cash flow requirements of the financing used.

Question

Quizplus · Accepted Answer

The hedging principle indeed involves matching the cash flow from an asset with the cash flow requirements of the financing used. It is a risk management strategy that minimizes the exposure to market fluctuations and ensures that the financing used to acquire the asset can be adequately serviced by the cash flows generated from the asset.

The Hedging Principle Involves Matching the Cash Flow from an Asset