Which of the following is cited as a good reason for NOT hedging currency exposures?
A) Shareholders are more capable of diversifying risk than management.
B) Currency risk management through hedging does not increase expected cash flows.
C) Hedging activities are often of greater benefit to management than to shareholders.
D) All of the above are cited as reasons NOT to hedge.

Question

Quizplus · Accepted Answer

All of the options listed are commonly cited reasons against hedging currency exposures. Shareholders can diversify their own risk, hedging does not necessarily increase expected cash flows, and it may benefit management more than shareholders.

Which of the Following Is Cited as a Good Reason