Which of the following is true of the impact of hedging on executive compensation contracts?
A) A well-designed compensation package will leave a risk-averse executive exposed to risk.
B) Hedging restricts the managers to take riskier but high return projects.
C) A firm will be able to evaluate its executives more accurately by implementing a hedging programme.
D) Hedging can increase risk and penalize the executives for a decline in profits of the project.
Correct Answer:
Verified
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