An Options Contract to Hedge Possible Future Price Changes of an Inventory

question 7

Multiple Choice

An options contract to hedge possible future price changes of an inventory of supply parts would:

• A)Represent a cash flow hedge.
• B)Represent a fair value hedge.
• C)Represent a foreign currency hedge.
• D)Not qualify as a hedge.

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Definitions:

Routine Message

Everyday or regularly occurring communication that conveys standard information in business or personal contexts.

Routine Business Requests

Ordinary or regular solicitations or inquiries made in the course of business operations, often involving standard transactions or information gathering.

Direct Approach

A communication strategy that involves straightforwardly presenting information or a request without circumlocution.

Routine Requests

Standardized inquiries or petitions for information or action that are common in professional and personal communication settings.