Which of the Following Reflects a Hedge of Net Payables

question 44

Multiple Choice

Which of the following reflects a hedge of net payables in British pounds by a U.S. firm?

• A) Purchase a currency put option in British pounds.
• B) Sell pounds forward.
• C) Sell a currency call option in British pounds.
• D) Borrow U.S. dollars, convert them to pounds, and invest them in a British pound deposit.
• E) Purchase a currency put option in British pounds AND sell pounds forward.

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Definitions:

Embarkation

The process of boarding a vehicle or vessel for the purpose of starting a journey or voyage.

Aggregation

The process of collecting and combining multiple pieces of data, information, or objects into a single group or summary form.

Structural Gestation

The process involved in the development and structuring of systems, organizations, or social patterns, especially over time.

Civic Ritual

Practices and ceremonies that reflect the values, traditions, and beliefs of a community or society, often associated with commemorating historical events or celebrating cultural heritage.