Consider These Five Statements

question 26

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.
Which of the following are correct?

• A) i, ii, iii and iv are true
• B) i, ii, iv and v are true
• C) ii, iii, and iv are true
• D) ii, iii and v are true

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Definitions:

Mounting Distance

The specific space required between two objects or components to properly install or fit them.

Overall Length

The total length of an object measured from one end to the other.

Crown Height

The vertical distance between the top of a curved surface (like a road or a cam) and the chord (straight line) connecting the endpoints of the curve.

Whole Depth

In gear terminology, the total depth of a gear tooth space, from the top of the tooth to the bottom of the gullet.