With Respect to Selecting Hedging Instruments,"matching" Refers To

question 16

Multiple Choice

With respect to selecting hedging instruments,"matching" refers to:

• A)how closely the cost of the hedging instrument relates to the amount involved in the exposure being hedged.
• B)the relationship between the firm seeking to hedge an exposure and the firm offering the hedging instrument.
• C)the relationship of the two countries whose currency is involved in the hedge.
• D)how closely the currency and maturity of the hedging instrument lines up with the exposure being hedged.

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Definitions:

Non-Eligible Dividends

Dividends that do not qualify for the dividend tax credit in certain jurisdictions, typically paid by companies that pay tax at a rate that is lower than the standard corporate tax rate.

Capital Gains

The profit earned from the sale of an asset or investment, which is the difference between the selling price and the purchase price.

Marginal Tax Rates

The rate at which an individual's or entity's additional income is taxed.

Total Tax

The aggregate amount of taxes owed by an individual or corporation, including federal, state, local, and other applicable taxes.