Which of these statements is not true?
A) Transactions to reduce risk are unlikely to add value if investors can easily undertake similar transactions.
B) Hedging may reduce the costs of financial distress.
C) Transactions to reduce risk always add value.
D) Hedging is a zero-sum game.

Question

Quizplus · Accepted Answer

Transactions to reduce risk can sometimes add value, but it is not always the case. There may be situations where the cost of hedging outweighs the benefits. Therefore, statement C is not always true. A, B, and D are all true statements.

Which of These Statements Is Not True