​Macomb Corporation Is a U

question 50

Multiple Choice

​Macomb Corporation is a U.S. firm that invoices some of its exports in Japanese yen. If it expects the yen to weaken, it could ____ to hedge the exchange rate risk on those exports.

• A) ​sell yen put options
• B) ​buy yen call options
• C) ​buy futures contracts on yen
• D) ​sell futures contracts on yen

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Definitions:

Capital

Financial assets or the financial value of assets, such as cash and goods, working to create wealth through investment or production.

Operating Cash Flows

Cash generated from a company's normal business operations, indicating its ability to generate revenue.

Total Opportunity Cost

The overall cost of choosing one option when the value of the best alternative option is considered.

Total Carrying Costs

The total expenses associated with holding inventory, including storage, insurance, taxes, and opportunity costs.