When Comparing the Forward Hedge to the Options Hedge, the MNC

question 62

True/False

When comparing the forward hedge to the options hedge, the MNC can easily determine which hedge is more desirable, because the cost of each hedge can be determined with certainty.

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Definitions:

Pretax Financial Income

The amount of income that a company has earned before any taxes have been deducted.

Straight-Line Depreciation

Straight-line depreciation is a method of allocating the cost of a tangible asset over its useful life evenly, resulting in a fixed amount of depreciation expense each period.

Taxable Income

The portion of income that is subject to income tax, after deductions and exemptions.

Permanent Differences

These are differences between taxable income and accounting income that will not reverse in future periods.