7-8 Funding a portion of assets with equity capital means that hedging risk does not require perfect matching of the assets and liabilities.

Question

Quizplus · Accepted Answer

When a portion of assets is funded with equity capital, it does not have a fixed obligation to pay dividends or interest, which means hedging risk does not require perfect matching of the assets and liabilities. This provides a certain amount of flexibility in managing risk.

7-8 Funding a Portion of Assets with Equity Capital Means