If You Own a Foreign Currency Denominated Bond,you Can Hedge

question 35

Multiple Choice

If you own a foreign currency denominated bond,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)a swap contract where pay the cash flows of the bond in exchange for dollars.

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Definitions:

Reinforcement

In behavioral psychology, it refers to any stimulus which strengthens or increases the probability of a specific response.

Contingency Responding

A learning process where the learner adjusts behaviors based on the presence of specific stimuli and the consequences that follow those behaviors.

Instrumental Conditioning

A learning process in which behavior is modified through the use of rewards or punishments.

Fixed-Ratio

A schedule of reinforcement where a response is reinforced only after a specified number of responses, leading to a high and steady rate of response.