The Most Direct and Popular Way of Hedging Transaction Exposure

question 24

Multiple Choice

The most direct and popular way of hedging transaction exposure is by

• A)exchange-traded futures options.
• B)currency forward contracts.
• C)foreign currency warrants.
• D)borrowing and lending in the domestic and foreign money markets.

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Definitions:

Favorable Difference

A financial term indicating that actual revenues are higher than planned revenues or actual expenses are lower than planned expenses.

Unfavorable Difference

A situation where actual costs exceed the standard or expected costs, often referred to in budgeting and variance analysis.

Planned Results

The expected outcomes or objectives set by a business or project before it starts, often used for budgeting and performance evaluation.

Differences

Variances or disparities between entities, items, or processes that are being compared or evaluated.