​The Real Cost of Hedging Payables with a Forward Contract

question 71

Multiple Choice

​The real cost of hedging payables with a forward contract equals:

• A) ​the dollar cost of hedging minus the dollar cost of not hedging.
• B) ​the dollar cost of not hedging minus the dollar cost of hedging.
• C) ​the dollar cost of hedging divided by the dollar cost of not hedging.
• D) ​the dollar cost of not hedging divided by the dollar cost of hedging.

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Definitions:

Intrinsic Motivation

The drive to engage in activities for their own sake, due to the inherent satisfaction or fulfillment derived from the activity itself, rather than for some external reward.

Extrinsic Motivation

Motivation driven by external rewards such as money, fame, grades, or praise rather than by intrinsic factors like personal satisfaction or enjoyment of the task itself.

Activity Directed

Focused or oriented towards specific actions or tasks.

Human Growth

The physical, psychological, and emotional development of humans from birth to the end of life.