If Lazer Ltd

question 34

Multiple Choice

If Lazer ltd. desired to lock in the maximum it would have to pay for its net payables in euros but wanted to be able to capitalize if the euro depreciates substantially against the pound by the time payment is to be made, the most appropriate hedge would be:

• A) a money market hedge.
• B) purchasing euro put options.
• C) a forward purchase of euros.
• D) purchasing euro call options.
• E) selling euro call options.

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Definitions:

Price-earnings Ratio

A valuation ratio of a company's current share price compared to its per-share earnings, indicating market expectations.

Earnings Per Share

Earnings per share (EPS) is a financial metric that divides a company's profit by the number of outstanding shares, indicating the profitability attributed to each share.

Par Value

The nominal or face value of a stock or bond as stated by the issuing company, not necessarily reflecting its market value.

Statutory Restriction

Legal limitations or constraints, often imposed by law, that dictate how an organization can operate or use certain resources.