If the elimination of volatile cash flows through risk management techniques does not significantly change a firm's
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If the elimination of volatile cash flows through risk management techniques does not significantly change a firm's expected future cash flows and WACC, investors will be indifferent to holding a company with volatile cash flows versus a company with stable cash flows. Note that investors can reduce volatility themselves: (1) through portfolio diversification, or (2) through their own use of derivatives.
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Financial Management Theory And Practice
ISBN: 9780324259681
11th Edition
Authors: Eugene F Brigham, Michael C Ehrhardt
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