Which of the Following Statements Is False

question 7

Multiple Choice

Which of the following statements is false?

• A) Currency options allow firms to lock in a future exchange rate; currency forward contracts allow firms to insure themselves against the exchange rate moving beyond a certain level.
• B) Generally speaking, cash-and-carry strategies are used primarily by large banks, which can borrow easily and face low transaction costs.
• C) Currency options, like the stock options, give the holder the right-but not the obligation-to exchange currency at a given exchange rate.
• D) Many managers want the firm to benefit if the exchange rate moves in their favor, rather than being stuck paying an above-market rate.

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Definitions:

Developing Nations

Countries with a lower living standard, underdeveloped industrial base, and low Human Development Index relative to other countries.

Extreme Poverty

The condition where individuals live below the minimum income level considered necessary to meet basic needs, often defined as living on less than $1.90 a day.

Poverty Rate

The percentage of the population with incomes below the official poverty income levels that are established by the federal government.

World's Income

The total earnings from production and services by individuals and corporations around the globe, often considered in terms of Gross World Product.