A Firm Wants to Hedge a Potential Transaction but Is

question 98

Multiple Choice

A firm wants to hedge a potential transaction but is also concerned about the possibility that it may not take place.In this case it is better to hedge potential risks using:

• A)options.
• B)forwards.
• C)futures.
• D)a cash-and-carry strategy.
• E)the spot exchange rate.

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Definitions:

Regulatory Compliance

The state of being in accordance with established laws, regulations, standards, and specifications relevant to an organization's operations.

Explicit and Implicit Coercion

Directly or indirectly forcing someone to act in a certain way by using threats or manipulation rather than open persuasion.

Facilitation and Support

Refers to the process of making something easier or more achievable, often involving assistance or guidance.

Manipulation and Co-optation

Techniques used in organizational change management where manipulation involves unobtrusively steering people towards desired behaviors, while co-optation involves winning over or neutralizing opposition by incorporating key individuals into the change process.