What Has Occurred When One Company Arranges to Buy a Foreign

question 24

Multiple Choice

What has occurred when one company arranges to buy a foreign currency sometime in the future, at an exchange rate quoted today?

• A) The company has purchased a foreign currency option.
• B) The company has entered a forward contract.
• C) The currency has been devalued.
• D) None of the above

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Definitions:

Banking Regulations

Are laws and guidelines established by governments and financial regulatory bodies to ensure stability, fairness, and efficiency in the banking sector.

Corporate Governance

The framework of rules, practices, and processes by which a company is directed and controlled, ensuring accountability, fairness, and transparency in a company's relationship with its stakeholders.

Financial Markets

Platforms where individuals, companies, and governments can trade financial securities, commodities, and other fungible assets.

Financialization

The increasing dominance of financial markets, financial motives, financial institutions, and financial elites in the economy, overshadowing traditional industrial capital.