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:

Purely Competitive

A market structure where numerous firms sell identical products, and no single seller can influence the market price.

Bureau of Labor Statistics

A U.S. government agency responsible for collecting and analyzing important economic data, including unemployment, labor productivity, and price indexes.

Demand Fall

A decrease in the quantity of a product or service that consumers are willing and able to purchase at various prices, typically resulting in lower prices.

Labor-saving Technological Change

It refers to innovations or advancements in technology that reduce the amount of labor required to produce goods or services, often leading to increased productivity.