The Reduction or Covering of a Foreign Exchange Risk Is

question 44

Multiple Choice

The reduction or covering of a foreign exchange risk is called

• A)hedging.
• B)speculation.
• C)intervention.
• D)arbitrage.

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Definitions:

Trigger Strategy

A strategy in repeated games where a player's response is conditioned on past behavior, such as retaliating or cooperating based on the other player's previous actions.

Repeated Game

A strategic interaction that occurs multiple times, allowing players to potentially develop strategies based on past outcomes.

Price Competition

A type of competition in which companies try to attract customers by offering lower prices than their competitors.

Equilibrium Payoff

In game theory, the reward or outcome each player expects to receive when all players choose strategies that lead to a stable state where no player can benefit by changing their strategy alone.