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In your role as an advisor to the CFO of Watermelon Technologies you have been asked to write a report on why hedging might reduce

In your role as an advisor to the CFO of Watermelon Technologies you have been asked to write a report on why hedging might reduce agency costs. While you have no problems convincing him that bondholders would prefer the firm hedge exchange rate risk, what arguments would you put forward to persuade him that he has a personal stake in the decision as well?

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