The Currency Risk of an Exporter Can Be Reduced By

question 38

Multiple Choice

The currency risk of an exporter can be reduced by:

• A) hedging, using the foreign exchange futures.
• B) transacting only in the currency of the exporter's own country.
• C) buying a forward contract for the exporter's currency.
• D) all of the given choices.

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Definitions:

Consumption Function

A formula that expresses the relationship between total consumption and gross national income.

Standard Deviation

A statistic that measures the dispersion or variability of a dataset relative to its mean, used to quantify the amount of variation or dispersion of a set of values.

Aggregate Income

The total income earned by all factors of production in an economy, including wages, rents, interest, and profits.

Aggregate Consumption

The total amount of goods and services consumed in an economy, often used to analyze economic health and growth.