In a Forward Market Hedge for Transaction Exposure, the Firm

question 40

Multiple Choice

In a forward market hedge for transaction exposure, the firm sells forward:

• A) foreign currency receivables for the home currency, matched to the due date of the receivables.
• B) domestic currency receivables for the foreign currency, matched to the due date of the receivable.
• C) its anticipated sales in the foreign currency.
• D) its projected earnings in the foreign currency, which will be repatriated.

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Definitions:

Corporation

A legal entity recognized by law as separate from its owners, with rights to own assets, incur liabilities, and conduct business.

Closely Held

A business structure where the ownership is concentrated in a small group of individuals, often family members.

Agency Relationships

A legal and fiduciary relationship between two parties, where one party, the agent, is authorized to act on behalf of another, the principal, in business transactions.

Employer-Employee

A legal and professional relationship between a person who hires others to perform specific tasks and those who are hired.