To Hedge a ____ in a Foreign Currency, a Firm

question 53

Multiple Choice

To hedge a ____ in a foreign currency, a firm may ____ a currency futures contract for that currency.

• A) receivable; purchase
• B) payable; sell
• C) payable; purchase
• D) None of these are correct.

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Definitions:

Income Statement

A financial statement that shows a company’s revenues, expenses, and profits over a specific period, typically a quarter or year.

Times Interest Earned Ratio

A financial metric comparing a company's earnings before interest and taxes (EBIT) to its interest expenses, evaluating the company's ability to meet its interest obligations.

Income Before Income Taxes

The profit a company has generated before accounting for income tax expenses, often found on the income statement.

Times Interest Earned Ratio

A financial metric that measures a company's ability to cover its interest obligations with its earnings before interest and taxes (EBIT).