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:

Submerged

This term relates to something being beneath the surface of water or another liquid; it can also metaphorically refer to something being hidden or not visible at the surface level.

Groupthink

A psychological phenomenon that occurs within a group of people, where the desire for harmony or conformity results in an irrational or dysfunctional decision-making outcome.

Self-Awareness

The conscious knowledge of one's own character, feelings, motives, and desires.

Group Size

The number of individuals constituting a group, affecting its dynamics and interactions.