Which of the Following Is a Non-Derivative Hedging Instrument

question 42

Multiple Choice

Which of the following is a non-derivative hedging instrument?

• A)forward contract on foreign currency
• B)foreign currency call option
• C)foreign currency loan
• D)foreign currency put option

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Definitions:

Binding Contract

A legally enforceable agreement between two or more parties, where each is obligated to fulfill certain terms or face legal consequences.

Negotiations

The process of discussion aimed at reaching an agreement or compromise between two or more parties.

Offeree's Silence

A legal concept where the silence of the party to whom an offer is made does not generally constitute acceptance of the offer.

Acceptance

The act of agreeing to the terms of an offer, thus completing the process of making a contract binding.