The following exhibit illustrates the distribution of expected net cash flows of an individual firm before...

 

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The following exhibit illustrates the distribution of expected net cash flows of an individual firm before and after hedging (x net cash flow, y= expected value) Prior Distribution Posterior Distribution a Does the hedging add value to this firm? Explain b. Does hedging reduce the risk for this firm? Explain : 4 The following exhibit illustrates the distribution of expected net cash flows of an individual firm before and after hedging (x net cash flow, y= expected value) Prior Distribution Posterior Distribution a Does the hedging add value to this firm? Explain b. Does hedging reduce the risk for this firm? Explain : 4