Which of the Following About Foreign Exchange Objectives for a Large

question 46

Multiple Choice

Which of the following about foreign exchange objectives for a large company is incorrect?

• A) An FX strategy that requires a company to hedge a defined percentage of its identified FX exposures at all times is called a defensive strategy.
• B) A company document should state whether it will have a centralised or decentralised FX operation.
• C) A firms' FX function is part of the organisation's treasury division.
• D) Strategies that require a company to analyse and forecast movements in FX markets and then apply based on its forecasts are called hedging strategies.

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Definitions:

Public Good

A product or service that is non-excludable and non-rivalrous, meaning its consumption by one individual does not reduce its availability to others.

Collective Willingness

The aggregated preference or desire of a group of individuals to support or buy into a particular idea, policy, or product.

Marginal Cost

The boost in complete costs associated with creating one more unit of a product or service.

Private Good

A product that is excludable and rival in consumption, meaning its use is limited to the purchaser and it cannot be shared without diminishing availability to others.