To Hedge a Foreign Currency Receivable

question 91

Multiple Choice

To hedge a foreign currency receivable,

• A)buy call options on the foreign currency with a strike in the domestic currency.
• B)buy put options on the foreign currency with a strike in the domestic currency.
• C)sell call options on the foreign currency with a strike in the domestic currency.
• D)sell put options on the foreign currency with a strike in the domestic currency.

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Definitions:

Federal Income Tax

Tax levied by the national government on an individual's or corporation's annual income.

Gross Earnings

The total amount of money earned by an individual or company before any deductions or taxes are taken out.

Withholding Allowance

A deduction that employees can claim to reduce the amount of their income that is subject to federal income tax withholding.

Gross Earnings

The total amount of income earned by an individual or a business before any deductions like taxes, benefits, and other adjustments.