The Purpose of Foreign Exchange Futures Agreements Under Flexible Exchange

question 35

Multiple Choice

The purpose of foreign exchange futures agreements under flexible exchange rates is to

• A)make more profits for international bankers.
• B)prevent shipping costs.
• C)effectively reduce or eliminate exchange rate risk.
• D)force economics students to really understand hedging.

Recognize the strategic significance of operations within the value chain.

Understand how firms can create competitive advantages through the value chain.

Recognize the purpose and process of conducting a value chain analysis.

Identify factors that contribute to a firm's cost advantage or differentiation advantage.

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Definitions:

Constructive Condition

A condition inferred by law from the conduct of parties or the circumstances, rather than explicitly stated in a contract.

Materiality

A principle in accounting and law that concerns the significance of an event, fact, or item in the context of decision-making or reporting.

Forfeiture

The loss or giving up of something as a penalty for wrongdoing or breach of contract.

Reasonable Expectations

The anticipation or belief regarding a particular outcome or behavior under ordinary circumstances by a reasonable person.