Which of the Following Is Probably NOT an Advantage of Foreign

question 16

Multiple Choice

Which of the following is probably NOT an advantage of foreign exchange risk management?

• A) the reduction of the variability of cash flows due to domestic business cycles
• B) increased availability of capital
• C) reduced cost of capital
• D) All of the above are potential advantages of foreign exchange risk management.

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Definitions:

Traceable Fixed Advertising

Traceable fixed advertising costs are fixed expenses allocated to specific marketing campaigns or advertisements, whose effectiveness in generating sales can be directly monitored and assessed.

Fixed General Factory Overhead

Refers to the regular, consistent costs incurred by a factory that are not directly tied to the level of production, such as rent and salaries of permanent staff.

Variable Production Costs

Variable production costs refer to expenses that change in direct proportion to the volume of production, such as raw materials and labor costs.

Sales Commissions

Payments made to sales personnel based on the sales volume or value they have achieved.