Assume Zero Transaction Costs

question 14

Multiple Choice

Assume zero transaction costs. If the 90-day forward rate of the euro is an accurate estimate of the spot rate 90 days from now, then the real cost of hedging payables will be:

• A) positive.
• B) negative.
• C) positive if the forward rate exhibits a premium, and negative if the forward rate exhibits a discount.
• D) zero.

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Definitions:

Activation-information-mode Model

A theory suggesting that dreams are initiated in the brain's pons and that their content is affected by the dreamer's personal life and experiences.

Dreams

Successions of images, ideas, emotions, and sensations occurring involuntarily in the mind during certain stages of sleep.

Waking Hours

The period of the day during which an individual is awake and engaging in activities, as opposed to sleeping.

Hidden Observer

A concept in hypnosis suggesting that a part of the mind remains aware and observes when the rest of the mind is under hypnosis.