One of the Problems Using Options to Hedge Forex Exposure

question 70

Multiple Choice

One of the problems using options to hedge forex exposure is:

• A) the cost.
• B) it is risky.
• C) unavailable.
• D) it does not work.

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Definitions:

Favorable Volume Variance

A metric that indicates a company has produced or sold more than initially anticipated, leading to increased profitability.

Contribution Margin

The difference between the sales revenue of a company and its variable costs.

Fixed Budget

A budget that remains unchanged and is based on a fixed level of activity, regardless of actual levels of output, sales, or revenue throughout the budget period.

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity levels, allowing for more accurate financial planning and analysis.