The Real Cost of Hedging Payables with a Forward Contract

question 54

Multiple Choice

The real cost of hedging payables with a forward contract equals:

• A) the nominal cost of hedging minus the nominal cost of not hedging.
• B) the nominal cost of not hedging minus the nominal cost of hedging.
• C) the nominal cost of hedging divided by the nominal cost of not hedging.
• D) the nominal cost of not hedging divided by the nominal cost of hedging.

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Definitions:

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A partnership in which some or all partners have limited liabilities, protecting them from the debts and liabilities of the partnership beyond their investment.

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