Consider These Five Statements

question 2

Multiple Choice

Consider these five statements:
i.If an Australian-based company has a USD 1 million payable on 1 July next year and a USD 1 million receivable due on 1 August,the company has a perfect natural hedge.
ii.An Australian exporter with a transaction denominated in Singapore dollars (SGD) is exposed to downside risk if the AUD appreciates.
iii.An exposure in a currency with a high standard deviation against the AUD entails a greater degree of risk than does a similarly sized exposure in a currency that has a relatively low standard deviation.
iv.If an Australian-based company has net exposures in a range of currencies,each exposure should be not hedged because each of them involves the same degree of risk.
v.If an Australian company imports components from Italy,and at the same time exports goods to Germany,with both contracts under a euro-denominated contract and dated 31 July next year,the company has no FX exposure.
How many of these statements are true and how many are false?

• A) 4 statements are true and 1 is false
• B) 3 statements are true and 2 are false
• C) 2 statements are true and 3 are false
• D) 1 statement is true and 4 are false

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Definitions:

BCG Business Portfolio

A matrix developed by the Boston Consulting Group to help businesses analyze their product lines or business units for strategic decision-making based on market growth and market share.

Compound Annual Growth Rate

The mean annual growth rate of an investment over a specified time period longer than one year, expressing the compound growth of an investment.

Relative Market Share

A metric that compares a company’s market share to that of its largest competitor, indicating its competitive position in the market.

BCG Business Portfolio

A strategic planning tool that categorizes a company's products or services into four quadrants (Stars, Cash Cows, Question Marks, Dogs) based on market growth and market share.