Which of the Following FX Trading Activities Is Used to Hedge

question 78

Multiple Choice

Which of the following FX trading activities is used to hedge FX risk?

• A)The purchase and sale of foreign currencies for the purpose of profiting from forecasting or anticipating future movements in FX rates.
• B)The purchase and sale of foreign currencies to allow customers to partake in and complete international commercial trade transactions.
• C)The purchase and sale of foreign currencies for the purpose of offsetting customer exposure in any given currency.
• D)The purchase and sale of foreign currencies to allow customers to take positions in foreign real and financial investments.
• E)None of the options.

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Definitions:

Income

Money that an individual or business receives in exchange for providing labor, producing goods, or investing capital, over a certain period.

Utility Function

A mathematical representation that translates the satisfaction or happiness a consumer gains from consuming quantities of goods and services into a numerical value.

Consumer's Surplus

The difference between what consumers are willing to pay for a good or service and what they actually pay.

Earplugs

Devices inserted in the ear canal to protect the ears from loud noises, water, foreign bodies, or excessive wind.