Explain how hedging can reduce a firms tax liability

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Reference no: EM131315472

1. In what way can hedging reduce the risk of financial distress? How might reducing the risk of fi nancial distress increase firm value?

2. Explain how hedging can reduce a firm's tax liability.

3. Why do closely held firms tend to hedge more than firms with diffuse ownership?

Reference no: EM131315472

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