Which of the Following Reflects a Hedge of Net Receivables

question 23

Multiple Choice

Which of the following reflects a hedge of net receivables in British pounds by a U.S. firm?

• A) purchase a currency put option in British pounds.
• B) sell pounds forward.
• C) borrow U.S. dollars, convert them to pounds, and invest them in a British pound deposit.
• D) A and B

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Definitions:

Flooding

A behavioral therapy technique used to treat phobias and anxiety disorders by exposing the patient to their fear object or context without any danger, in order to overcome their anxiety.

Classical Conditioning

A learning process that occurs when two stimuli are repeatedly paired; a response that is initially elicited by the second stimulus is eventually elicited by the first stimulus alone.

Research

The systematic investigation and study of materials and sources in order to establish facts and reach new conclusions.

Avoidance Responses

Behaviors aimed at preventing exposure to feared stimuli, which can reinforce anxiety and phobic disorders.