Your supervisor has been given a quote from a consultant to cover the risk of an increase in interest rates, as your company is looking to borrow money in the future. Your supervisor is complaining that the cost of the hedge is too high and perhaps the company is better off to taking a chance and hoping that interest rates do not increase. Provide two (2) reasons as to why the hedge could add value to the company despite the cost of the risk management process.

Answer rating: 100% (QA)

While the cost of implementing a hedge to cover the risk of an increase in interest rates may seem h... View the full answer