Multiple Choice
Identify the correct statement about corporations.
A) Corporations are risk neutral because they can diversify all risks except idiosyncratic risk.
B) Corporations should ideally hedge risks only at prices lower than the AFP.
C) Corporations buy hedging instruments at greater price than AFP.
D) The individual level utility functions of risk aversion can explain the hedging behavior of corporations.
E) Corporations are risk neutral because they can diversify systematic risk.
Correct Answer:
Verified
Correct Answer:
Verified
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