Assume Zero Transaction Costs

question 30

Multiple Choice

Assume zero transaction costs. If the 90-day forward rate of the euro is an accurate estimate of the spot rate 90 days from now, then the real cost of hedging payables will be:

• A) ​positive.
• B) ​negative.
• C) ​positive if the forward rate exhibits a premium, and negative if the forward rate exhibits a discount.
• D) ​zero.

---

Definitions:

Continuous Change

An ongoing process of adaptation and transformation in response to evolving conditions and challenges.

Performance Improvements

Performance improvements involve the enhancement of work processes, efficiency, and outputs in both individuals and organizations, often through strategic changes, training, or adopting new technologies.

Product Innovation

The process of developing and introducing new or significantly improved goods or services to meet consumer or market needs.

Practicality

The aspect of being realistic, feasible, and focused on what is achievable and sensible in real-world situations.