An MNC Frequently Uses Either Forward or Futures Contracts to Hedge

question 116

True/False

An MNC frequently uses either forward or futures contracts to hedge its exposure to foreign receivables. To do so, the MNC can either sell the foreign currency forward or sell futures.

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Definitions:

Gambling Monopoly

A situation where a single entity controls the provision of all gambling services and activities within a particular jurisdiction.

X-inefficiency

The difference between efficient behavior of businesses assumed or required by economic theory and their observed behavior in practice, often due to a lack of competitive pressure.

Tight Supply Conditions

A market situation where the supply of a good is limited, often leading to higher prices.

Nonrivalrous Consumption

A consumption characteristic where one individual's use of a good does not reduce availability to others.