Consider These Five Statements

question 83

Multiple Choice

Consider these five statements:
i.If an Australian business decides to hedge a USD receivable at time t + 3,it would hedge through a forward contract in which it sells the AUD forward for t + 3.
ii.An Australian exporter with a USD receivable would be hedging through a money market hedge if it borrows USD today and repays the loan on the day on which the USDs are received from the payments of the export account receivable.
iii.If an Australian company borrows through an offshore sale of AUD-denominated bonds in the eurobond market,it is not exposed to FX risk.
iv.'Internal' hedging techniques may save a company the costs incurred in using 'market-based' hedging techniques,but they have recognisable costs as well.
v.A net payable in one currency and a net payable in another currency is a relatively low-risk set of exposures if the amounts and timing are identical,and the correlation coefficient between the two currencies is -0.99.
How many of these statements are true and how many are false?

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

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Definitions:

Temperate Climate

A climate characterized by moderate temperatures, neither extremely hot nor cold, often with four distinct seasons.

Wealthier Countries

Countries with a high level of income per capita, indicating substantial economic resources and a better quality of life for its citizens.

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Personal space is the physical distance individuals maintain between themselves and others in social situations, which can vary widely across different cultures and contexts.

Cultural Background

The influence of the culture in which an individual was raised, including traditions, values, norms, and practices.