Which of the Following Statements Is FALSE

question 3

Multiple Choice

Which of the following statements is FALSE?

• A)The most common method firms use to reduce the risk that results from changes in exchange rates is to hedge the transaction using currency forward contracts.
• B)Fluctuating exchanges rates cause a problem known as the importer-exporter dilemma for firms doing business in international markets.
• C)Exchange rate risk naturally arises whenever transacting parties use different currencies: Both of the parties will be at risk if exchange rates fluctuate.
• D)Because the supply and demand for currencies varies with global economic conditions,exchange rates are volatile.

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Definitions:

Capacity to Contract

The legal ability of an individual or entity to enter into a binding contract, having the necessary age, mental state, and authority.

Intoxicated

A state of impairment or being under the influence of alcohol or drugs, which can affect a person's physical and cognitive abilities.

Incapacity

A physical or mental condition that makes an individual unable to manage their own affairs or to understand the nature and effects of their actions.

Married Women

Women who are legally joined in marriage to a spouse, often subject to specific legal rights and obligations distinct from unmarried women.