What Was the Net Increase or Decrease in Cash Flow

question 77

Multiple Choice

What was the net increase or decrease in cash flow from having purchased the foreign currency option to hedge this exposure to foreign exchange risk?

• A) $0
• B) $10,000 increase.
• C) $10,000 decrease.
• D) $20,000 increase.
• E) $20,000 decrease.

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Definitions:

Elastic

Describes demand that is highly sensitive to changes in price, meaning that quantity demanded can significantly increase or decrease as prices change.

Average Cost

The total cost of production divided by the number of goods produced, representing the per-unit cost.

Marginal Revenue

The boosted income realized by vending one extra unit of a good or service.

Natural Monopoly

Firm that can produce the entire output of the market at a cost lower than what it would be if there were several firms.