An MNC Frequently Uses Either Forward or Futures Contracts to Hedge

question 116

True/False

An MNC frequently uses either forward or futures contracts to hedge its exposure to foreign receivables. To do so, the MNC can either sell the foreign currency forward or sell futures.

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Definitions:

Business Combinations

Mergers and acquisitions where one company acquires control over another, combining entities into one.

Acquisition Cost

The total cost associated with obtaining an asset, including the purchase price and any additional expenses necessary to bring it to its intended use.

Share Issue Costs

Expenses incurred by a company in the process of issuing new shares of stock, including legal, accounting, and underwriting fees.

Fair Value

Fair Value refers to the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.