Financial Risk Manager Part 1

Financial Risk Manager Part 1

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The newly appointed Chief Financial Officer (CFO) of a publicly traded computer hardware company is conducting an assessment to better understand the perspectives and motivations of different stakeholders. In particular, the CFO aims to comprehend how these stakeholders perceive the firm's strategy for handling risk via hedging. Which of the following statements is correct?




Explanation:

B is correct. Debt investors generally have little or no upside from a firm's revenue volatility, so they would prefer that the firm use hedging strategies to make its revenue stream more stable.