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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.
What is the nature of a concessionary loan and how is it handled in the APV model? A concessionary loan is a loan that is provided by a governmental body at below the normal ma
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what are the advantages blades could gain from importing or exporting to a foreign country such azs thailand?
How are financing costs generally incorporated into the capital budgeting analysis process? Financing costs are typically captured in the discount or hurdle rate when doing IRR
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