Which of the Following Is Probably Not Appropriate for an MNC

question 16

Multiple Choice

Which of the following is probably not appropriate for an MNC wishing to reduce its exposure to British pound payables?

• A) Purchase pounds forward
• B) Buy a pound futures contract
• C) Buy a pound put option
• D) Buy a pound call option

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Definitions:

Periodic Depreciation

The allocation of an asset's cost over its useful life, recognized as an expense on the income statement at regular intervals, typically annually.

Cost Allocation

The process of identifying, aggregating, and assigning costs to cost objects, such as products, departments, or projects.

Units-Of-Output Method

A depreciation method where the expense amount is based on the units of production or use of the asset during the period.

Residual Value

Residual Value is the estimated value that an asset will realize upon its sale at the end of its useful life, crucial for calculating depreciation for assets.