If a Firm Planning to Hedge Receivables Is Certain of the Future

question 23

Multiple Choice

If a firm planning to hedge receivables is certain of the future direction a spot rate will move, and requires a tailor-made hedge in terms of amount and maturity date, it should use a

• A)call options contract traded on an exchange.
• B)futures contract traded on an exchange.
• C)forward contract.
• D)put options contract traded on an exchange.

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Definitions:

Proportional Representation

Proportional representation is an electoral system in which parties gain seats in proportion to the number of votes cast for them, aiming for a more accurate representation of the electorate's preferences.

Legislature

The legislative body of a country or state, empowered to make, change, or repeal the laws of the land.

Political Parties

Organizations that seek to attain and maintain political power within a government, typically by participating in electoral campaigns.

Education Level

A measurement or degree of formal education achieved by an individual, often categorized as primary, secondary, tertiary, or higher.