Using Currency Derivatives to Reduce Potential Transaction,translation,and Economic Risks of Currency

question 35

Multiple Choice

Using currency derivatives to reduce potential transaction,translation,and economic risks of currency movements that could lead to losses for a firm or investor is called_____.

• A) hedging
• B) speculating
• C) a short position
• D) an organized exchange position
• E) a marked-to-market position

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Definitions:

Unrealized Loss

A loss that results from holding onto an asset that has decreased in price, but has not yet been sold.

Trading Investments

Investments in securities for the purpose of selling them in the near term to generate profit from short-term price fluctuations.

Statement of Income

A financial document that reports a company's financial performance over a specific period, detailing revenues, expenses, and net profit or loss.

Long-Term Investments

Assets that a company intends to hold for more than one year, including stocks, bonds, or real estate.