An MNC Frequently Uses Either Forward or Futures Contracts to Hedge

question 11

True/False

An MNC frequently uses either forward or futures contracts to hedge its exposure to foreign payables. To do so, the MNC can either sell the foreign currency forward or sell futures.

---

Definitions:

Financing Activities

Transactions related to raising capital and repaying shareholders, including issuing equity and taking on loans.

Cash Flow Statement

A financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, dividing activity into operating, investing, and financing activities.

Treasury Stock

Shares that were once part of the outstanding shares of a company but were later reacquired by the company itself.

Deferred Tax Asset

A tax reduction or benefit that arises due to temporary differences between the book value and tax value of assets and liabilities, which can be used to offset future tax liabilities.