In evaluating the pros and cons of corporate risk management,one argument against hedging is
A)if the corporate guys were good at forecasting exchange rates,they would make more money on Wall Street,so only incompetent managers are left at corporations to hedge.
B)shareholders who are diversified have already managed their exchange rate risk.
C)the hedging costs go into someone else's pocket.
D)none of the options

Question

Quizplus · Accepted Answer

Shareholders who have a diversified portfolio may have already managed their exchange rate risk through their own investments. Hedging by the corporation may therefore be redundant and unnecessary, increasing costs for the company without benefiting shareholders.

In Evaluating the Pros and Cons of Corporate Risk Management,one