Speculation Would Involve Using Forward Contracts and Options to Reduce

question 62

True/False

Speculation would involve using forward contracts and options to reduce the exchange rate risk on future foreign exchange transactions.

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Definitions:

Dividends

Are the distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.

Market-capitalization Rate

A valuation metric that assesses the total value of a company's outstanding shares by multiplying the stock price by the total number of shares.

Plowback Ratio

A financial metric indicating the proportion of earnings retained by a company after dividends are paid, used for reinvestment into business operations.

Expected ROE

The projected return on equity for a future period, based on estimates of future earnings and shareholders' equity.