A Hedge Is

question 237

Multiple Choice

A hedge is

• A) a financial strategy that reduces the change of suffering losses arising from foreign exchange risk.
• B) an exchange rate arrangement in which a country pegs the value of its currency to the exchange value.
• C) the possibility that changes in the value of a nation's currency will result in variations in the market value of assets.
• D) active management of a floating exchange rate on the part of a country's government.

---

Definitions:

Cost Of Goods Sold

The direct costs attributable to the production of the goods sold in a company, including material and labor costs.

Liquidity Ratio

Financial metrics that measure a company's ability to meet its short-term obligations using its most liquid assets.

Profitability Ratio

A class of financial metrics that are used to assess a business's ability to generate earnings relative to its revenue, assets, equity, or other financial metrics.

Solvency Ratio

Financial metrics used to evaluate a company's ability to meet its long-term debt and other obligation by comparing its assets to its liabilities.