Which of the Following Is a Function of the Foreign

question 25

Multiple Choice

Which of the following is a function of the foreign exchange market?

• A)To provide some insurance against foreign exchange risk
• B)To protect short-term cash flow from adverse changes in exchange rates
• C)To eliminate volatile changes in exchange rates
• D)To reduce the economic exposure of a firm
• E)To enable companies to engage in capital flight when countertrade is not possible

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Definitions:

Variable Costs

Costs that change in direct proportion to changes in the level of production or sales volume.

Fixed Administration Costs

Ongoing expenses not directly tied to production or sales volume, such as salaries of executive staff and office rent.

Inpatient Days

The total number of days that patients spend admitted to a hospital or healthcare facility for treatment.

Net Profit

The actual profit after working expenses not included in the calculation of gross profit have been paid.