When a company attempts to control the impact of price fluctuations on its future cash flows and its sales,it is entering into a cash-flow hedge.

Question

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When a company attempts to control the impact of price fluctuations on future cash flows and sales, it is entering into a cash flow hedge. This involves using financial instruments such as futures contracts or options to offset potential losses due to price changes. The objective of a cash flow hedge is to reduce the volatility of future cash flows, rather than to generate profits from speculation.

When a Company Attempts to Control the Impact of Price