State some of the primary reasons for a company NOT engaging in active hedging of financial...

Question

Question

State some of the primary reasons for a company NOT engaging in active hedging of financial risk?

Answer 1

Answer #1

The primary reasons for a company not engaging in active hedging of financial risk are:

1) Unaware of the risk : The company is not aware of the risk that is prevailing on their finance.

2) Hedging being costly : The company is in the impression that the hedging the position might be costly.

3) Bad financials : The company might be in bad finance position that they could not afford hedging cost.

4) Not risky situation : The company knows that there is a financial risks and also know it is not that severe.

5) Situation would reverse :The company is of the idea that the worse situation would get reversed, so there is no need for any hedging.

============

Answer 2

Similar Homework Help Questions

Risk & Reward/Risk Management 9. What are the primary (3) drawbacks of using hedging as a...

Risk & Reward/Risk Management 9. What are the primary (3) drawbacks of using hedging as a risk response for a farmer? (3 points)
7. (a)State with reasons two (2) HR activities which should be conducted before engaging in recruitment...

7. (a)State with reasons two (2) HR activities which should be conducted before engaging in recruitment and selection. (6 marks) (6 marks) of recruitment (b) Explain the difference between job posting and job bidding. (e) Distinguish between sources of recrutment and methods (12 marks) a) Why are selecton teats used in saing an organizaton? (6 marko) (6 marks)
What is the definition of accounts receivable? What are some primary reasons patients are sometimes not billed in a time...

What is the definition of accounts receivable? What are some primary reasons patients are sometimes not billed in a timely manner?

Week 9 Discussion Forum What is the definition of accounts receivable? What are some primary reasons...

Week 9 Discussion Forum What is the definition of accounts receivable? What are some primary reasons patients are sometimes not billed in a timely manner?
Financial institutions constantly try to manage risk for different reasons. Discuss the objectives of risk management...

Financial institutions constantly try to manage risk for different reasons. Discuss the objectives of risk management practices for a financial institution. Identify some objectives that are pre-loss and other objectives that are post-loss. Include some examples and supporting arguments in your discussion.
What are some reasons for increasing overall levels of corporate debt in recent years? What level...

What are some reasons for increasing overall levels of corporate debt in recent years? What level of risk could happen for another recession as a result? In terms of financial statements, what effects can debt have on the overall health of a company, positive or negative?

What are some of the reasons that a financial statement preparer would need to stay current...

What are some of the reasons that a financial statement preparer would need to stay current with emerging and recently-issued guidance? What are some reasons that an auditor might need to stay current? At what level should you, as a professional, begin to monitor emerging guidance? Why?
In insurance what would be some of the reasons why a client wouldn't renew a policy...

In insurance what would be some of the reasons why a client wouldn't renew a policy with the insurance company and what would be some of the reasons why a broker may not want to remain on risk?
Discuss some of the primary reasons an HIT implementation project might fail in a healthcare organization?...

Discuss some of the primary reasons an HIT implementation project might fail in a healthcare organization? As the HIT Director, how would you prevent this from happening? Would you bring in a consulting firm that has gone through various implementations to advise or try to utilize the staff you currently have?

Discuss the triple-therapy approach in the management of peptic ulcers and state reasons why some drugs...

Discuss the triple-therapy approach in the management of peptic ulcers and state reasons why some drugs like NSAIDs need to be taken after meals