With respect to information asymmetry,
A)management knows about the firm's exposure position much better than stockholders,and therefore should be the ones to manage exchange exposure.
B)stockholders know about the firm's exposure position much better than management,and therefore should be the ones to manage exchange exposure.
C)regulators know about the firm's exposure position much better than management,and therefore should be the ones to oversee exchange exposure.
D)none of the options

Question

Quizplus · Accepted Answer

Information asymmetry refers to a situation where one party involved in a transaction has more or better information than the other party. In the context of exchange exposure management, management usually has better knowledge and understanding of the firm's exposure position than the stockholders. Therefore, it would be more appropriate for management to manage exchange exposure to minimize potential losses.

With Respect to Information Asymmetry