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Should a firm hedge? Why or why not?
Answer: Firms may not need to hedge exchange risk in a perfect capital market. But firms can add to their value by hedging if markets are not perfect. First, if management identify about the firm’s exposure better than shareholders, the company, not its shareholders, should hedge. Second, firms may be capable to hedge at a lower cost. Third, if default costs are important, corporate hedging can be justifiable because it decreases the probability of default. Fourth, if the firm faces progressive taxes, it can decrease tax obligations by hedging which stabilizes corporate earnings.
Yield to put is the rate at which the present value of cash flow to the first put date is equal to the price plus interest rate. It is used for
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applicability of an operating cycle in vegetable growing business
The price charged when one segment of an organization provides goods or services to another segment of the organization.
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