Apex Enterprises Wants the Right to Buy a Foreign Currency

question 68

Multiple Choice

Apex Enterprises wants the right to buy a foreign currency at a specified price at any time up to a specified date. Apex most likely needs a ________.

• A) forward premium
• B) forward discount
• C) call option
• D) put option

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Definitions:

Retention Ratio

The percentage of net income that is retained to be reinvested in the business, rather than being paid out as dividends.

Dividend Payout Ratio

The percentage of earnings paid to shareholders in dividends, calculated by dividing the total amount of dividends by the net income of the company.

Net Income

The total earnings of a company after subtracting all expenses, taxes, and costs from total revenue.

Total Assets

The sum of all assets owned by a company, including both current and long-term assets.