A Symmetric Hedge Is A

question 22

Multiple Choice

A symmetric hedge is a:

• A)fixed hedge that locks in currency values.
• B)hedge that allows a firm to gain exactly as much as it loses on the exposure being hedged.
• C)flexible hedge that allows currency values to be locked only when the firm pursuing the hedge decides to use the hedge.
• D)flexible hedge that allows the currency values to change until a specified date in the future.

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Definitions:

Trade

The exchange of goods, services, or both between two or more parties.

Numeraire Good

An economic term referring to a benchmark commodity or asset used to compare the value of other goods or assets.

Utility Function

A utility function is a mathematical representation used in economics to model satisfaction or preference regarding goods or services by consumers.

Initial Endowment

The initial amount of resources, wealth, or goods that an individual or entity possesses at the start of a period.