Which of the Following Is Probably NOT an Advantage of Foreign

question 47

Multiple Choice

Which of the following is probably NOT an advantage of foreign exchange risk management?

• A)The reduction of the variability of cash flows due to domestic business cycles.
• B)Increased availability of capital.
• C)Reduced cost of capital.
• D)All of the above are potential advantages of foreign exchange risk management.

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Definitions:

Market Failure

When the free market's distribution of goods and services is inefficient, it typically results in a reduction of societal welfare.

Inefficient Allocation

A situation where resources are not used in the best possible way, often leading to waste or unmet needs.

Negative Externality

An undesirable outcome of an economic activity that affects third parties who did not choose to incur that cost or benefit.

Air Pollution

The presence of substances in the atmosphere that are harmful to human health, the environment or cause climate change.