A Hedge That Involves the Use of a Futures Contract

question 1

True/False

A hedge that involves the use of a futures contract on an instrument that is different from the instrument being hedged is called a cross hedge.

Comprehend the privity of contract rule and its exceptions.

Explain the implications of the parol evidence rule in contract interpretation.

Recognize the effect of non est factum in negating contractual obligations.

Understand the role and enforcement of assignments in contract law.

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Definitions:

Decimal Place

Refers to the position or number of digits to the right of the decimal point in a decimal number, indicating a part of a whole in fractional terms.

Working Capital

The difference between a company’s current assets and current liabilities, indicating its short-term financial health and operational efficiency.

Current Year

The ongoing year or the present calendar year in which transactions or activities are being accounted for.

Preceding Year

The year immediately before the current year.