While Hedging Through Interest Rate Futures Reduces or Eliminates the Risk

question 52

Multiple Choice

While hedging through interest rate futures reduces or eliminates the risk of loss, it also:

• A)is illegal in some cases.
• B)has not been accepted by most corporate financial managers.
• C)eliminates the possibility of an abnormal gain.
• D)None of the above

---

Definitions:

Predetermined Overhead Rate

A method for distributing manufacturing overhead across production units, utilizing projected costs.

Customizing Department

A department within a company that is dedicated to modifying or adapting products or services to meet specific customer needs or requirements.

Direct Labor-Hour

A measure of the labor time spent directly on the production of goods or services, often used as a basis for allocating labor costs to products.

Manufacturing Overhead

All manufacturing costs that are not directly associated with the production of a product, including costs for indirect materials, indirect labor, and other indirect expenses.