When a Buyer Locks in an Exchange Rate and Avoids

question 61

Multiple Choice

When a buyer locks in an exchange rate and avoids the risk of currency fluctuations, it is called:

• A)the spot market.
• B)the gray market.
• C)vertical purchasing.
• D)currency hedging.
• E)factoring.

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Definitions:

Pressure Multiplied

A phenomenon in hydraulic systems where force is increased through the use of fluid dynamics and varying cross-sectional areas.

Area

A measure of the extent of a two-dimensional surface or shape, expressed in square units.

Atmospheric Pressure

The pressure exerted by the weight of the atmosphere above a point, affecting weather patterns and boiling temperatures of liquids.

Sea Level

The average height of the ocean's surface between high and low tide; used as a standard base for measuring elevations.