If You Owe a Foreign Currency Denominated Debt, You Can

question 14

Multiple Choice

If you owe a foreign currency denominated debt, you can hedge with

• A)a long position in a currency forward contract.
• B)a long position in an exchange-traded futures option.
• C)buying the foreign currency today and investing it in the foreign county.
• D)both a and c

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Definitions:

Desired Rate

A target interest rate that an individual or entity seeks to achieve on an investment.

Income Tax

Taxes imposed by governments on the income generated by businesses and individuals within their jurisdiction.

Qualitative Factors

Non-quantifiable elements that influence decision-making or performance assessment in business, including company reputation, employee satisfaction, or customer loyalty.

Capital Investment

Funds invested in a business by owners or shareholders for the purpose of furthering its objectives, often used to acquire assets or improve operations.