Which of the Following Statements Is FALSE

question 53

Multiple Choice

Which of the following statements is FALSE?

• A)Currency options allow firms to lock in a future exchange rate;currency forward contracts allow firms to insure themselves against the exchange rate moving beyond a certain level.
• B)Generally speaking,cash-and-carry strategies are used primarily by large banks,which can borrow easily and face low transaction costs.
• C)Currency options,like stock options,give the holder the right-but not the obligation-to exchange currency at a given exchange rate.
• D)Many managers want the firm to benefit if the exchange rate moves in their favor,rather than being stuck paying an above-market rate.

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Definitions:

R/Min

Revolutions per minute, a unit of rotational speed indicating the number of full rotations completed in one minute by a mechanical component.

Gear Ratio

The ratio of the number of teeth on two meshing gears, denoting the speed and torque relationship between them.

Circular Thickness

The width measured along the circumference of an object, often relevant in gears or circular parts.

Pitch Diameter

The effective diameter of a screw thread, halfway between the major and minor diameters, crucial for thread engagement and measurement.