To Hedge a Payable Position in a Foreign Currency with a Money

question 21

True/False

To hedge a payable position in a foreign currency with a money market hedge, the MNC would borrow the foreign currency, convert it to dollars, and invest that amount in the U.S. until the payable is due.

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Definitions:

Predict

The act of forecasting future events or outcomes based on current or past information.

Mental Processes

The internal, covert activities of our minds, such as thinking, feeling, and remembering.

Forming Hypothesis

The process of developing a tentative explanation or prediction that can be tested through investigation.

Scientific Investigation

The systematic process of gathering and analyzing evidence to understand the natural world, following scientific methods.