To 'Lock-In' a 90-Day Borrowing Rate a Hedger Can

question 22

Multiple Choice

To 'lock-in' a 90-day borrowing rate a hedger can:

• A)buy a call option on a BAB futures contract
• B)sell a call option on a BAB futures contract
• C)buy a put option on a BAB futures contract
• D)sell a put option on a BAB futures contract.
• E)None of these.

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Definitions:

Transferred Out

Transferred Out is a term often used in accounting and inventory control to denote goods or assets moved from one department, location, or account to another.

Equivalent Units

A concept in cost accounting used to allocate costs to partially completed goods, computed by taking the number of partially completed units and converting them into a number of fully completed units.

Total Materials Costs

The total expense incurred by a company for the materials that are used in the production process of its goods or services.

Manufacturing Cost

Direct expenditures involved in creating goods, such as components, employee wages, and additional production overhead.