A Corporation That Uses a Strategy of Hedging All Contracts

question 76

Multiple Choice

A corporation that uses a strategy of hedging all contracts specifying a foreign currency (i.e.foreign accounts receivable and foreign accounts payable) :

• A)Will always be better off than if the contracts were not hedged.
• B)Recognizes a net loss if the foreign exchange rate increases.
• C)Avoids net losses from fluctuations in foreign exchange rates.
• D)Recognizes a net gain if the foreign exchange rate increases.

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Definitions:

Escape Learning

A behavioral phenomenon where an individual learns to perform a behavior to terminate or avoid an unpleasant situation or stimulus.

Social Learning Theory

A theory that proposes individuals learn new behaviors and information by observing others, emphasizing the importance of cognitive processes in learning.

Correct Behavior

Actions or responses that are deemed appropriate within a given context, often aligning with societal, ethical, or professional standards.

Punishment

The imposition of a penalty or adverse consequence on an individual or group in response to undesired behavior.