A Company Due to Pay a Certain Amount of a Foreign

question 16

Multiple Choice

A company due to pay a certain amount of a foreign currency in the future decides to hedge with futures contracts.Which of the following best describes the advantage of hedging?

• A) It leads to a better exchange rate being paid
• B) It leads to a more predictable exchange rate being paid
• C) It caps the exchange rate that will be paid
• D) It provides a floor for the exchange rate that will be paid

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The method of merging terms in an algebraic expression that possess identical variables elevated to the identical exponent.