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:

Compound Interest

Interest computed not only on the original amount invested or loaned but also on the interest that has been added to this principal over past periods.

Simple Interest

Interest computed solely on the initial sum, without accumulation through compounding.

Income Earned

Revenue generated from a person's job, investments, or business operations, excluding capital gains or gifts.

Annual Salary

The total amount of money earned by an employee in one year before taxes and deductions.