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:

Cross-Price Elasticity

A measure of how the quantity demanded of one good changes in response to a price change of another good.

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a given price in a specific period.

Good Changes

Positive alterations in circumstances or conditions, often implying improvements or advancements.

Price Elasticity

A metric that quantifies the responsiveness of the demand for a product to changes in its price.