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Which of the following statements is true regarding corporate risk management? None of the other answer choices are correct Hedging enhances the effectiveness of performance-based
Which of the following statements is true regarding corporate risk management?
| None of the other answer choices are correct | ||
| Hedging enhances the effectiveness of performance-based compensation by increasing the amount of risks that are out of mangers control | ||
| Hedging reduces the probability of bankruptcy and increases the cost of debt | ||
| By increasing the firms borrowing capacity, hedging can reduce the probability that the firm lacks the financing needed to take on positive NPV projects. | ||
| Hedging increases a firms expected tax liability and reduces expected net income |
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