You Are Hoarse from Explaining to Your Supervisor That the Cost

question 94

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 DM2 million commitment if the spot rate is DM1.6/$, the forward rate is DM1.55/$, and the expected spot rate at the end of the hedge is DM1.6/$?

• A)$0
• B)$25,000
• C)$40,323
• D)$68,966 current Dollar commitment =

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Definitions:

Lateral Relations

Lateral relations refer to the interactions or communication occurring between employees or departments on the same hierarchical level within an organization.

Network Structure

An organizational design where groups or individuals work more like nodes in a network rather than in a hierarchical management structure, allowing for flexible coordination and collaboration.

Control and Coordination

The process of managing and integrating activities to ensure that organizational goals are efficiently achieved.

Network Complexity

The intricacy and interconnectedness of components within a network, reflecting its diversity, number of nodes, connections, and the degree of their interactions.