A Derivatives Hedge That Seeks to Eliminate Translation Exposure

question 60

Multiple Choice

A derivatives hedge that seeks to eliminate translation exposure

• A)eliminate any mismatch of the rate of change in net assets and the rate of change in net liabilities denominated in the same currency.
• B)really involves speculation about foreign exchange rate changes.
• C)by simultaneously going long and short in currency futures contracts.
• D)none of the above

---

Definitions:

Sale Of Inventory

The process of selling a company's goods and products that are part of its stock to generate revenue.

Payment To Supplier

A financial transaction involving the transfer of funds to a supplier in exchange for goods or services.

Operating Cycle

The duration of time from the acquisition of inventory to the collection of cash from receivables, reflecting the efficiency of a business's operations.

Inventory Turnover

Inventory Turnover is a ratio that shows how many times a company's inventory is sold and replaced over a period.