The Type of Hedge Which Is of the Exposure to the Variability

question 25

Multiple Choice

The type of hedge which is of the exposure to the variability in cash flows that is attributable to a particular risk that is associated with all, or some component of, a recognised asset or liability is a:

• A) fair value hedge
• B) cash flow hedge
• C) hedge of a net investment in a foreign operation
• D) all of the above

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Definitions:

Marginal Cost

The added expense incurred by creating one more unit of a product or service.

Average Total Cost

The total cost of production (fixed and variable costs combined) divided by the quantity of output produced.

Minimum

The lowest permissible limit or the least possible amount or degree of something.

Marginal Cost

The funds required to produce an extra item of a product or service.