Which of the Following Currency Risks Could Only Be Hedged

question 610

Multiple Choice

Which of the following currency risks could only be hedged by a non deliverable forward (NDF) ?

• A) an exposure in Latvian Lats (LVL)
• B) an exposure in Russian Rouble (RUB)
• C) an exposure in Romanian Leu (RON)
• D) an exposure in Bulgarian Lev (BGN)

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Definitions:

Allocative Efficiency

A state in which resources are allocated in a way that maximizes the overall utility or welfare of society, ensuring that every good or service is produced up to the point where the last unit provides a benefit to consumers equal to the cost of producing it.

Productive Efficiency

A situation where an economy or entity is operating in such a way that it cannot produce more of one good without decreasing the production of another good.

Economic Profits

The difference between total revenue and total costs, including both explicit and implicit costs, representing surplus value created by a firm.

Excess Capacity

A situation where a firm or industry has more production resources available than is necessary to produce the current level of output, often indicating inefficiency.