Maturities of Hedging Instruments and the Maturity of Currency Exposures

question 13

Multiple Choice

Maturities of hedging instruments and the maturity of currency exposures rarely are the same because:

• A)maturities of hedging instruments are standardized and set by the exchanges where they are traded.
• B)maturities of hedging instruments are not fixed and can change as circumstances change.
• C)maturities of currency exposures are not fixed and can change as circumstances change.
• D)the maturity of hedging instruments is not known when the hedging instruments are acquired.

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Definitions:

Compound

A substance made up of two or more different elements chemically bonded together in a fixed proportion by weight.

Soluble

Capable of being dissolved in a solvent, typically referring to a substance's ability to dissolve in water.

Carbonyl Group

A functional group consisting of a carbon atom double-bonded to an oxygen atom, with the formula C=O.

Organic Compound

A chemical compound containing carbon atoms covalently bonded to other elements, typically hydrogen, oxygen, and nitrogen, among others.