All firms should aim to reduce their risks and avoid bankruptcy. One way they try to lessen their chance of bankruptcy, or entering into a financially distressed state, is by using risk management techniques. Part of risk management is using derivatives, which many firms rely on today to reduce their exposure to certain types of risk and avoid a cash flow crunch. I test the notion that hedging reduces the probability of bankruptcy. Hedging reduces risks such as interest rate and currency risk, and these types of risk can send a firm into financial distress. Financial distress can result in bankruptcy, so hedging should then ultimately reduce the risk of bankruptcy.
| Identifer | oai:union.ndltd.org:ucf.edu/oai:stars.library.ucf.edu:honorstheses1990-2015-1200 |
| Date | 01 January 2000 |
| Creators | Eaby, Jamie L. |
| Publisher | STARS |
| Source Sets | University of Central Florida |
| Language | English |
| Detected Language | English |
| Type | text |
| Source | HIM 1990-2015 |
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