When a Firm Hedges a Risk, It

question 56

Multiple Choice

When a firm hedges a risk, it

• A)eliminates the risk.
• B)transfers the risk to someone else.
• C)makes the government assume the risk.
• D)increases the risk.

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Definitions:

Foreign Bonds

These are bonds issued in a domestic market by a foreign entity, in the domestic market's currency, as a way for the issuer to raise capital from investors in that market.

Foreign Government

The governing authority of a nation, state, locality, or community outside of one's own country.

Direct Quote

The rate of foreign exchange denoted in the national currency per each foreign currency unit.

British Pounds

The official currency of the United Kingdom, also known as GBP (Great British Pounds).