The following questions are based on one of Lecture $7$ assigned readings:

"Deshmukh, Sanjay, and Stephen Vogt. $2005.$ "Investment, cash flow, and corporate

hedging." Journal of Corporate Finance $11(4),628-644."$

Which one of the following can best describe the key hypothesis tested by

Deshmukh $(2005)?$

A$)$ Firm's hedging reduces the volatility of internal cash flows.

B$)$ Firm's hedging reduces their reliance on external capital or funds.

C$)$ By hedging, firm's investment should be less dependent on the internal cash

flow.

D$)$ By hedging, firm's investment should be more dependent on the external

capital or funding.

E$)$ By hedging, firm should make investment decisions regardless of the

availability of internal cash flow or external capital.