Hedging a Purchase Requiring Settlement in a Foreign Currency

question 38

Multiple Choice

Hedging a purchase requiring settlement in a foreign currency:

• A)will always result in a lower cost than just waiting to purchase the foreign currency on the settlement date.
• B)will always result in a higher cost than just waiting to purchase the foreign currency on the settlement date.
• C)increases the risk associated with international transactions.
• D)decreases the risk associated with international transactions.
• E)both a. and d. are correct.

---

Definitions:

Filter Theories

Theories that propose mechanisms for how our brains selectively focus on important sensory information while ignoring irrelevant data.

Experimental Finding

The results or conclusions derived from systematically conducted experiments, often used to validate or refute hypotheses in scientific research.

Automatic Processes

Tasks or cognitive processes that occur with little to no conscious thought or effort, such as walking or riding a bicycle.

Intention

A mental state that involves a commitment or plan to carry out a specific action.