Which of A) Through D) Is a Reasonable Guideline for Currency

question 19

Multiple Choice

Which of a) through d) is a reasonable guideline for currency risk management?

• A) All noncash currency risk exposures should be hedged with currency derivatives.
• B) Do not hedge unless the purpose is to reduce translation exposure to currency risk.
• C) Treasury should hold the managers of individual operating units responsible for the consequences of unexpected changes in currency values.
• D) Treasury should quote market prices for currency hedges to the individual units.
• E) None of the above

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Definitions:

Merchandise

Goods that are bought and sold in any business, particularly in retail.

Freight Charge

The cost incurred for transporting goods between places, typically charged by carriers for shipments.

Net Income

The total profit of a company after all expenses, taxes, and costs have been subtracted from total revenue; also known as net earnings or net profit.

Sales Discounts

Reductions in the price of a product or service offered to incentivize prompt payment by the customer.