If a Firm Must Pay for Goods It Has Ordered

question 58

Multiple Choice

If a firm must pay for goods it has ordered with foreign currency,it can hedge its foreign exchange-rate risk by ________ foreign exchange futures ________.

• A)selling;short
• B)buying;long
• C)buying;short
• D)selling;long

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Definitions:

Operating Expenses

Costs associated with running a business's core operations, excluding the cost of goods sold.

Depreciation Expense

The methodical distribution of the expense of a physical asset throughout its expected lifespan.

Cash Payments

Transactions that involve the outflow of cash to settle obligations or purchase goods and services.

Cost of Merchandise Sold

The total cost of goods that have been sold during a specific period, including purchase price, transportation, and handling charges, less any discounts or allowances.