An Australian Importer with FX Payable in 3 Months Can

question 68

Multiple Choice

An Australian importer with FX payable in 3 months can hedge and lock in the price of the required foreign currency by:

• A) buying AUD futures.
• B) buying a currency swap.
• C) selling AUD futures.
• D) selling a currency swap.

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Definitions:

MC

MC, or Marginal Cost, is the cost of producing one additional unit of a product, crucial for understanding profit maximization in businesses.

Marginal Revenue

The additional income from selling one more unit of a good; essentially the change in total revenue from an additional unit sold.

Perfect Competition

An idealized market structure in which there are many buyers and sellers, no barriers to entering or exiting the market, and products are identical.

Economic Profit

The difference between total revenue and total costs, including both explicit and implicit costs, measuring the true profitability of a firm.