Which of the Following Is NOT True About a Range

question 1

Multiple Choice

Which of the following is NOT true about a range forward contract?

• A) It ensures that the exchange rate for a future transaction will lie between two values
• B) It can be structured so that it costs nothing to set up
• C) It is constructed from two options and a forward contract
• D) It can be used to hedge either a future inflow or a future outflow of a foreign currency

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Definitions:

Artificially Low Price

A pricing strategy where goods or services are sold at a price below their market value, often to drive competitors out of the market or gain market share.

Elastic

Describes a situation where the quantity demanded or supplied of a good or service significantly changes in response to price changes.

Cartel's Product

The goods or services produced and sold by a cartel, which is an association of independent businesses organized to regulate production, pricing, and marketing of goods.

Price-leadership Model

A market strategy where one leading company sets the price for goods or services, and others in the industry follow suit.