Best Answer

If the elimination of volatile cash flows through risk management techniques does not significantly change a firm's expected future cash flows and WACC, investors will be indifferent to holding a company with volatile cash flows versus a company with stable cash flows. Note that investors can reduce volatility themselves: (1) through portfolio diversification, or (2) through their own use of derivatives.

User Avatar

Wiki User

โˆ™ 2011-02-25 01:44:53
This answer is:
User Avatar

Add your answer:

Earn +20 pts
Q: What are two reasons stockholders might be indifferent between owning stock of a firm with volatile cash flows and that of a firm with stable cash flows?
Write your answer...
Related questions

What are two reasons stockholders might be indifferent between owning the stock of a firm with volatile cash flows and that of a firm with stable cash flows?

Huh? Bill Gates might be indifferent if he has shares in a company with stable flows or erratic ones; he doesn't NEED the money. If he sells either at a loss that offsets other gains in income, so he gets a writeoff that makes the loss smaller, but still real. Maybe if you are very young and you figure you have 60 years before you'll be selling the stock, you might be indifferent. Perhaps the question could be clearer?

What is the difference between the boiling point of volatile material and other non-volatile?

Volatile substances will have a lower boiling point because their vapor pressure is higher and their intermolecular attractions are weaker. Non-volatile substances will have a higher boiling point for the opposite reasons.

What are reasons to avoid buying stock online?

Some of the reasons to avoid buying stocks online are hidden fees, panic buying, ordering the wrong type of stock, and placing market orders in a volatile market.

What happens between Hannah and Justin 13 reasons why?

What happen between Hannah and justin in the book 13 reasons why

What are some of the reasons for discrepancies between your classmates measurements of features on the fischertechniks block?

your mom has reasons?

What is the difference between of macrophage and phagocyte?

kithing reasons

What are three main reasons for the US Civil War?

There are a number of reasons for the US Civil War. But the three main reasons include: social and economic reasons between the south and the north, federal vs state rights and the fight between non-slave and slave state proponents.

What are the differences in behaviours between boys and girls?

explain the reasons why there are differences in behaviours between boys and girls

What were the short term reasons for World War 1?

One of the short term reasons was the naval race between Britain and Germany.

Why do you countries such as Greece and Italy have debt problems?

I'm sure there are many reasons and opinions for this sad performance. In my opinion this was caused by both of those volatile countries never having stable,long term governments since WW2.

Who was the person who invented water?

== == That would be God. water was not invented by a person, it was created by God. Look in Genesis chapter 1, it'll explain everything.One of the main reasons for the existence of water is the cooling of the primordial Earth to the point where the outgassed volatile components were held in an atmosphere of sufficient pressure for the stabilization and retention of liquid water. There are other reasons as well.

Why are there wars between Islam and Christianity?

The wars are mainly due to political and imperial reasons but claimed to be for religious reasons. refer to related questions below.

Do dogs and cats fight give two reasons?

So the relationship between the two is good

What are the top ten reasons marriage fail?

Poor communication between you and your husband.

What were the reasons for war between Rome and Carthage?

A contest for supreacy in the Western Mediterranean.

The primary reason for migration between India and Pakistan in 1947 was?

economic reasons

What were the reasons for the similarities and differences between Adolf Hitler and Fidel Castro?


What were the two major reasons for the conflict between England and Spain?

England and Spain had been heading toward war for years. Trading rivalry and religious differences were the two major reasons for conflict between England and Spain.

Dividing users of ratios into short term lenders long term lenders and stockholders which ratios would each group be most interest in and for what reasons?

1 because short-termlenders liquidityconcern is with the firm'sability to pay short-termobligations as they come due.2 becauseLong-termlenders--leverageratiosare concerned with the relationship of debt to total assets.Long-termlenders--leverageratios will examine profitability to insure that interest payments can be made.3.becauseStockholders--profitabilityratios, with secondary consideration given to debt utilization, liquidity, and other ratios. Since stockholders are the ultimate owners of the firm, they are primarily concerned with profits or the return on their investment.

Do all substances catch fire on same temperature. Give reasons?

All substances does not Catch fire at the same temperature. More volatile substances -like solvents - Catch fire at a lot lower temperatures than more stable substance.

Why an astronaut in space needs to wear a special type of suit?

For Multiple reasons. 1) There is no air, therefore the astronaut must wear the suit, or rather the suit's helmet to breathe. 2) It protects him from physical damage when handling volatile or dangerous substances/ objects.

What was one of the reasons for the tremendous growth of the American economy between 1865 and 1914?


What is the difference between an assasin and a contract killer?

An assassin is usually a killer for political reasons.

One of the PRIMARY reasons that trade between nations takes place is because?


How many light are on a fire engine?

For obvious reasons between makes and models, this varies.