All of the Following Are Examples of a Cash Flow

question 10

Multiple Choice

All of the following are examples of a cash flow hedge, except:

• A) a forward contract to buy US$ hedging recognised borrowings in US$.
• B) a forward contract to buy US$ hedging future interest payments on variable rate debt in US$.
• C) a forward contract to sell US$ hedging a highly probable sale of inventory in US$.
• D) a forward contract to buy US$ hedging an unrecognised firm commitment to purchase goods in US$.

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Definitions:

Portfolio

A collection of financial investments like stocks, bonds, commodities, cash, and cash equivalents held by an investor or institution.

Standard Deviation

A measure of the dispersion or variability in a set of values, indicating how much the values differ from the mean of the set.

Expected Return

The anticipated return on an investment, taking into account the probabilities of each possible outcome.

Independent

Free from external control and constraint, or in finance, referring to analysis or advice that is unbiased by conflicts of interest.