Financial Derivatives Are Powerful Tools That Can Be Used by Management

question 55

Multiple Choice

Financial derivatives are powerful tools that can be used by management for purposes of:

• A) speculation.
• B) hedging.
• C) human resource management.
• D) A and B above

---

Definitions:

Actual Market

The existing market where a company's products or services are currently being sold, as opposed to potential new markets.

Contribution Margin

The amount by which the sale of a product or service exceeds its production and selling costs, indicating how much contributes to covering fixed costs and generating profit.

Variable Cost

A cost that varies with the level of output or production, such as materials and labor costs.

Sales Revenue

The total amount of money generated from the sale of goods and services before any costs or expenses are subtracted.