Where the Hedge Arrangement Completely Eliminates the Consequences of Adverse

question 17

Multiple Choice

Where the hedge arrangement completely eliminates the consequences of adverse exchange-rate fluctuations,the purchase or sales arrangement is considered to be:

• A) partially hedged.
• B) positively hedged.
• C) perfectly hedged.
• D) negatively hedged.

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Definitions:

Expected Profit

The forecasted amount of profit that a business or investment is projected to earn over a specific period.

Japanese Yen

The official currency of Japan, often represented by the symbol ¥.

Risk Averse

A risk-averse individual prefers certainty over uncertainty and would opt for a guaranteed outcome over a gamble with potentially higher, yet uncertain, rewards.

Expected Rate

Often refers to the anticipated rate of return on an investment or the expected growth rate of an economic variable.