Assume Zero Transaction Costs

question 8

Multiple Choice

Assume zero transaction costs.  If the 180day forward rate is an accurate estimate of the spot rate 180 days from now,then the real cost of hedging receivables will be:

• A) positive.
• B) negative.
• C) positive if the forward rate exhibits a premium, and negative if the forward rate exhibits a discount.
• D) zero.

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Definitions:

Pasta Shops

Retail establishments specializing in the sale of pasta and possibly related Italian food products and ingredients.

Functions Of Management

The primary roles in managing an organization, typically including planning, organizing, leading, and controlling to achieve business objectives.

Planning

The process of outlining a course of action or strategy to achieve a specific goal or set of objectives.

Leading

The act of guiding, directing, or influencing others towards the achievement of goals or objectives.