When Comparing the Forward Hedge to the Options Hedge, the MNC

question 50

True/False

When comparing the forward hedge to the options hedge, the MNC can easily determine which hedge is more desirable, because the cost of each hedge can be determined with certainty.

---

Definitions:

Yearly Income

The total pre-tax earnings received by an individual or household over the course of one year from all sources combined.

SST

Total Sum of Squares, a measure used in statistics to quantify the variance in a dataset.

SSE

Sum of Squares due to Error, a measure of the discrepancy between the data and an estimation model, reflecting the unexplained variance within the model.

Expected Yearly Income

An estimation of the amount of money one is anticipated to earn over the course of a year.