Why is the gain in a firm's value greater when more of its future foreign currency income is in the low tax region of the tax code?
What will be an ideal response?
This question is somewhat poorly phrased. If all of the firm's foreign currency income accrued in the low tax region of the tax code, there would be no gain to hedging. The gain in a firm's value (from hedging) arises from the ability to shift income from states in which it is subject to high taxes to states in which it is subject to low taxes.
You might also like to view...
The Analytical Hierarchy Process elegantly addresses scaling issues in criteria and negative utility in alternative scores
Indicate whether the statement is true or false
Negotiators often develop trusting, long-term relationships with people who are physically
close to them, or located nearby. This effect is known as the: A) propinquity effect B) networking game C) halo effect D) reactance theory