Which of the Following Statements Is True

question 3

Multiple Choice

Which of the following statements is true?

• A)An open position is a hedged position in a particular currency.
• B)An open position is an unhedged position in a particular currency.
• C)An open position is an unhedged position in an open market.
• D)An open position is a hedged position in an open market.

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Definitions:

Incremental Cash Flows

The difference between a firm’s future cash flows with a project and without the project.

Outstanding Shares

The total number of shares of stock that are currently owned by shareholders, including those held by institutional investors and restricted shares.

Merger

The process by which two or more companies combine to form one entity, often with the intention of increasing competitive advantage or expanding market reach.

Purchase Method

The purchase method is an accounting approach used in mergers and acquisitions, where the assets and liabilities of the acquired company are consolidated at their fair market values.