Exchange Rate Risk Can Be Eliminated with a Bank Contract

question 43

True/False

Exchange rate risk can be eliminated with a bank contract for delivery of the foreign currency when needed at a fixed exchange rate. The process is called pledging because the bank pledges to accept the exchange rate risk for a fee.

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Definitions:

Prorata Interest

Interest calculated proportionally, based on the fraction of the period for which the interest is accrued.

Evaluate

To assess or appraise the value, performance, or significance of an object, project, or situation.

Exponent Laws

A set of rules guiding the operations (such as multiplication, division, and raising to powers) on expressions with exponents.

Perform Operation

The execution of a series of actions or tasks according to specified procedures or instructions.