Which of the Following Is Not a Method That a Firm

question 12

Multiple Choice

Which of the following is not a method that a firm can use to hedge its foreign currency risk?

• A)buying or selling currency forward contracts
• B)borrowing money in the currency of the country in which the project will be generating revenues
• C)investing in risk-free bonds denominated in the currency of the country in which the firm's manufacturing facilities are located
• D)moving production facilities to the country in which the final products will be sold

---

Definitions:

Incomes

Earnings accrued, especially periodically, from labor or investment gains.

Freedom To Farm Act

A U.S. federal law enacted in 1996 aimed at allowing farmers greater management flexibility in what they plant and produce.

Agricultural Price Supports

Government interventions to stabilize or increase agricultural product prices through mechanisms such as subsidies or purchase commitments.

Acreage Allotments

A pre-1996 government program that limited the total number of acres to be used in producing (reduced amounts of) various food and fiber products and allocated these acres among individual farmers. These farmers had to limit their plantings to the allotted number of acres to obtain price supports for their crops.