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Instructions: Read Each of the Following Essay Introductions

question 300

Multiple Choice

Instructions: Read each of the following essay introductions. Select the letter of the method the writer used in each introduction. The essay below begins with a(n) If the entire human species were a single individual, that person would long ago have been declared mad. The insanity would not lie in the anger and darkness of the human mind though it can be a black and raging place indeed. And it certainly wouldn t lie in the transcendent goodness of that mind one so sublime, we fold it into a larger soul. The madness would lie instead in the fact that both of those qualities, the savage and the splendid, can exist in one creature, one person, often in one instant. Adapted from Jeffrey Kluger, What Makes Us Moral, Time, 12.3.07, p 55.

Comprehend the concepts, definitions, and uses of various derivative instruments such as futures, options (calls and puts), swaps, forward contracts, and their roles in financial markets.

Understand the principles of financial risk management and the goal it serves in stabilizing a firm’s cash flows and costs.

Grasp the differences between various financial contracts (forwards, futures, options, swaps) and their unique characteristics.

Acknowledge the factors driving the use of derivatives by firms, particularly for managing foreign exchange exposure and the cost of inputs.

Definitions:

CEO

Chief Executive Officer, the highest-ranking person in a company or organization, responsible for overall management.

Sales Budget

One of the major elements of the income statement budget that indicates the quantity of estimated sales and the expected unit selling price.

Production Budget

A budget of estimated units to be manufactured to meet budgeted sales and desired inventory levels.

Capital Expenditures Budget

A plan for a company’s spending on fixed assets, such as equipment or property, that will be used over a long period.