Which of the Following Actions Could a Company Use to Hedge

question 34

Multiple Choice

Which of the following actions could a company use to hedge balance sheet exposure?

• A) Forward contract on foreign currency
• B) Foreign currency option
• C) Foreign currency borrowing
• D) All of the above may be used to hedge balance sheet exposure.

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Definitions:

International Gold Standard

A monetary system in which the value of a country's currency is directly linked to a specific amount of gold, facilitating stable exchange rates and international trade.

Monetary Unit

The standard unit of value of a currency, used as a medium of exchange within an economy.

Exchange Rate

The value of one currency for the purpose of conversion to another, dictating how much of one currency can be exchanged for another currency.

Rolls-Royce

A British luxury automobile and aero engine manufacturer known for high-quality, prestigious vehicles and propulsion systems.