In a Market System, the Task of Assessing and Managing

question 193

Multiple Choice

In a market system, the task of assessing and managing the business risk of a firm is taken on by the firm's

• A) labor.
• B) capital suppliers.
• C) entrepreneurs.
• D) customers.

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Definitions:

Fair-Value Hedge

A hedge of the exposure to changes in fair value of an asset or liability or an unrecognized firm commitment, which could affect profit or loss.

Forward Contract

a financial agreement between two parties to buy or sell an asset at a future date for a price agreed upon today, commonly used for hedging and speculation.

Gross Method

The gross method is an accounting practice whereby discounts are not considered in the recording of purchases; discounts taken are recorded as income.

Forward Contract

A specialized agreement crafted between two parties to transact an asset at a certain price on a future agreed date.