Scenario: ABC Software ABC Software Is a Producer of Educational Software for Small

question 36

Multiple Choice

Scenario: ABC Software
ABC Software is a producer of educational software for small children. The company has operations in Switzerland and would like to expand its foreign production with a new facility in China.
-If ABC Software holds a currency option to purchase Swiss francs at SF1.67/$ in 30 days and at the end of the 30 days, the exchange rate is SF1.70/$, ABC Software ________.

• A) is required to follow through with a currency exchange
• B) would exercise its currency option
• C) has failed to hedge against exchange rate risk
• D) would not exercise its currency option

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Definitions:

Toll Station

A point at which drivers are charged a fee to use a bridge, road, or tunnel.

Standard Deviation

A metric showing the extent of deviation or scatter of data points, highlighting the distance of these points from the central value.

Probability

The likelihood or chance of a particular event happening, often expressed as a number between 0 and 1.

Sample Size

Sample size is the number of observations or elements chosen from a population for analysis, which can affect the accuracy and reliability of statistical results.