Good reasons for not hedging currency exposures

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Reference no: EM131933672

1. Which of the following are cited as good reasons for NOT hedging currency exposures?

A. Hedging activities are often of greater benefit to management than to shareholders.

B. Currency risk management through hedging does not increase expected cash flows.

C. Shareholders are more capable of diversifying risk than management.

D. Management is in a better position to assess firm currency risk than individual investors.

2. Hedging _____ the distribution of net cash flows about the mean of the distribution, but it ___ the mean itself.

A. narrows / doesn't change

B. narrows / decreases

C. widens / doesn't change

D. widens / raises

Reference no: EM131933672

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