Which of the Following Reflects a Hedge of Net Payables

question 17

Multiple Choice

Which of the following reflects a hedge of net payables on British pounds by a U.S. firm?

• A) purchase a currency put option in British pounds.
• B) sell pounds forward.
• C) sell a currency call option in British pounds.
• D) borrow U.S. dollars, convert them to pounds, and invest them in a British pound deposit.
• E) A and B

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Definitions:

Limited Resources

The finite availability of inputs or resources (labor, capital, land) that can be used for the production of goods and services.

Unlimited Wants

The economic concept that human desires and needs are constant and infinite, whereas the resources to fulfill them are limited.

Best Use

Optimal allocation or application of resources to maximize efficiency or value.

Positive Statement

An objective statement based on factual information or data that can be tested or rejected through observation.