Which of the Following Is Not an Example of a Fair

question 20

Multiple Choice

Which of the following is not an example of a fair value hedge?

• A) a forward contract to buy US$ hedging a recognised trade payable in US$.
• B) a forward contract to sell US$ hedging a recognised loan receivable in US$.
• C) a forward contract to sell US$ hedging a recognised trade receivable in US$.
• D) a forward contract to buy US$ hedging a highly probable purchase of inventory in US$.

Differentiate between one-tailed and two-tailed tests in hypothesis testing.

Interpret the conclusions of hypothesis tests in practical terms.

Recognize and interpret the practical implications of Type I and Type II errors for different stakeholders.

Calculate the test statistic for given data sets and determine the decision regarding hypotheses based on critical values or p-values.

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Definitions:

Ordinary Simple Interest

Interest calculated on the principal amount only, without compounding, usually over a period of a year or less.

360-Day Year

A financial convention or calculation basis where the year is assumed to consist of 360 days rather than 365 or 366 days, often used in interest rate calculations.

Ordinary Simple Interest Rate

The standard method of calculating interest, typically based on the original loan amount, rate, and time.

360-Day Year

A conventional method in finance where the year is assumed to have 360 days for simplifying interest rate calculations, commonly used in commercial lending.