In Foreign Currency Trading, 'Hedging' Means

question 34

Multiple Choice

In foreign currency trading, 'hedging' means:

• A) eliminating currency risk by fixing an exchange rate in advance.
• B) locking in a risk- free profit when the same currency is priced differently in two different markets by simultaneously buying in one market and selling in the other.
• C) entering a contract to exchange currencies at an agreed future date in which the rate is not specified.
• D) holding an open position in the hope of gaining from favourable currency movements.

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Definitions:

Modifying Behaviour

The process of using techniques, such as reinforcement or punishment, to alter an individual's actions or reactions.

Non-contingent Reinforcement

A behavior reinforcement strategy where rewards are given at fixed times or intervals, regardless of the behavior exhibited.

Thorndike

Edward Thorndike was an American psychologist who formulated the Law of Effect, which posits that behaviors followed by satisfying outcomes are likely to recur.

Successful Responses

are behaviors or actions that effectively achieve the desired outcome or solve a particular problem in a given context.