To Hedge a Payables Position in a Foreign Currency with a Money

question 27

True/False

To hedge a payables position in a foreign currency with a money market hedge, the MNC would borrow the foreign currency, convert it to dollars, and invest that amount in the United States until the payables are due.

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Definitions:

Marginal Social Cost

The total cost to society of producing an additional unit of a good or service, including both private costs and any externalities.

Marginal Cost

The cost added by producing one additional unit of a product or service.

Recycling

Recycling is the process of converting waste materials into new materials and objects, aiming to reduce the consumption of fresh raw materials and minimize environmental impacts.

Marginal Social Benefit

The additional benefit to society from the production or consumption of one more unit of a good.