In Order to Protect Against Foreign Exchange Risk,firms Can Use

question 7

Multiple Choice

In order to protect against foreign exchange risk,firms can use

• A)the spot market for foreign exchange.
• B)interest rate arbitrage.
• C)purchasing power parity.
• D)the forward market for foreign exchange.
• E)the J-curve.

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Definitions:

Enforceable

A term describing a contract or provision that is legally binding and can be upheld in court.

Postbox Rule

A legal principle in contract law stating that an offer is considered accepted at the moment the acceptance is dispatched by the offeree, not when it is received by the offeror.

Revocation

The process of formally withdrawing, cancelling, or annulling a decision, offer, or legal power.

Valid Contract

An agreement between two or more parties that is enforceable by law, meeting essential elements such as offer, acceptance, consideration, and legal purpose.