Which of the following is NOT cited as a good reason for hedging currency exposures?
A) Reduced risk of future cash flows is a good planning tool.
B) Reduced risk of future cash flows reduces the probability that the firm may not meet required cash flows.
C) Currency risk management increases the expected cash flows to the firm.
D) Management is in a better position to assess firm currency risk than individual investors.

Question

Quizplus · Accepted Answer

Hedging currency exposures reduces the risk of future cash flows (A and B) and allows management to assess and manage currency risk (D). It does not necessarily increase the expected cash flows to the firm (C), but rather helps to protect them from potential currency fluctuations.

Which of the Following Is NOT Cited as a Good