Which of the following statements about risk management strategies is/are correct?
I. It reduces the variability of a firm's expected cash flows.
II. It reduces the chance of catastrophic financial distress.
A) I only
B) II only
C) Both I and II
D) Neither I nor II

Question

Quizplus · Accepted Answer

Both statements are correct. Risk management strategies help reduce the variability of expected cash flows by hedging against unfavorable changes in market conditions or unexpected events. It also helps to reduce the chance of catastrophic financial distress by managing and mitigating potential risks. Hence, option C is the correct answer.

Which of the Following Statements About Risk Management Strategies Is/are