You Are Hoarse from Explaining to Your Supervisor That the Cost

question 1

Multiple Choice

You are hoarse from explaining to your supervisor that the cost, if any, of hedging exchange-rate risk can be thought of as an insurance premium to avoid surprises.What is the cost of hedging a €2 million commitment if the spot rate is €1.6/$, the forward rate is €1.55/$, and the expected spot rate at the end of the hedge is €1.6/$?

• A)$0
• B)$25,000
• C)$40,323
• D)$68,966

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Definitions:

Slave Power

A term used to describe the perceived political power held by slave owners in the United States pre-Civil War, influencing legislation and government.

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A federal institution that operated from 1816 to 1836, aimed at stabilizing and improving the national economy but faced opposition, leading to its closure.

Dred Scott Decision

A landmark 1857 U.S. Supreme Court case that ruled African Americans, whether enslaved or free, could not be American citizens and had no rights to sue in federal court.