Hedging (I) There are several schools of thought regarding hedging and its impact on the value of the firm. One school argues that, if the owners of the firm wish to hedge, they can do so in their own portfolios. If the firm hedges, the costs outweigh any benefits. Another school argues that the comparative advantage of the firm is production of goods and services, and that, if it does not hedge, it is essentially speculating. However, not all risk can be hedged by contracts and the cost of reducing some risks is prohibitively expensive. Write two short essays defending the following opposing positions: 

a “I never hedge, since it reduces my bottom line!” 

b “I always hedge, since I cannot take the risk of exchange rate losses bankrupting my firm.”