If a Firm Is Due to Be Paid in Euros

question 53

Multiple Choice

If a firm is due to be paid in euros in two months,to hedge against exchange-rate risk the firm should ________ foreign exchange futures ________.

• A)sell;short
• B)buy;long
• C)sell;long
• D)buy;short

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Definitions:

Temporary/Permanent

Refers to accounts within accounting practices; temporary accounts are reset each accounting period, while permanent accounts carry their ending balance into the next period.

General Journal Entries

The initial records where all financial transactions of a business are noted, using the double-entry method of accounting.

Account Balance

The amount of money in a financial repository at any given moment, which can include debts owed or credits available.

Financial Statement

Reports that provide detailed information about a company's financial performance and position, including the balance sheet, income statement, and cash flow statement.