Why would an entrepreneur find it desirable to hedge his or her foreign exchange risk?
What will be an ideal response?
An entrepreneur would find it desirable to hedge foreign exchange risk because the profits from the entrepreneurial venture are a significant part of the entrepreneur's wealth. Unlike regular investors, entrepreneurs are unable to diversify away such risks through transactions in their own portfolios. Hence, if forward rates are unbiased predictors of future spot rates, risk-averse entrepreneurs will choose to hedge their future foreign currency cash flows because doing so will reduce the variance of the flows without changing their expected values in the domestic currency. Therefore, reducing the variance of future profits would increase the entrepreneur's expected utility.
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According to U.S. GAAP, firms holding debt and equity securities for short-term profit potential
a. report the investments on the balance sheet at market value. b. initially record the investments at acquisition cost. c. report unrealized holding gains and losses on the investments in the income statement. d. all of the above. e. none of the above.
The type of information obtained from an applicant should be based on
A. job specifications. B. the biographical data set. C. manning tables. D. the HR manager's preferences.
The length of service on the job is frequently used to determine entitlement to employment benefits, promotions or transfers, and even job security. In other words, all of these are determined by:
a. criterion related validity. b. seniority. c. construct validity. d. performance.
An attitude is a physiological difference among consumers.
Answer the following statement true (T) or false (F)