Hedging Refers To

question 6

Multiple Choice

Hedging refers to:

• A)the acceptance of a foreign exchange risk
• B)the covering of a foreign exchange risk
• C)foreign exchange speculation
• D)foreign exchange arbitrage

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Definitions:

Normal Profits

The minimum level of profit necessary for a company to remain competitive in the market, essentially covering opportunity costs but not generating excess profit.

Purely Competitive

A market structure characterized by many buyers and sellers, free entry and exit, and a homogeneous product, leading to price-taking behavior.

Economic Profits

The outcome of subtracting all varieties of costs, including direct and indirect, from overall sales.

Consumer Demand

The desire and willingness of consumers to purchase goods and services at given prices.