Cross-Hedging May Involve Taking a Forward Position in a Currency

question 3

True/False

Cross-hedging may involve taking a forward position in a currency that is highly correlated with the currency an MNC needs to hedge.

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Definitions:

Net Income

The amount of money a company earns after subtracting all its expenses from its total revenues.

Acid-test Ratio

A financial measurement of a company's immediate liquidity position, calculated by dividing liquid assets by current liabilities.

Short-term Borrowing

Borrowed funds that are expected to be repaid within a short period, usually one year or less.

Accounts Receivable

Money owed to a business by its clients for goods or services offered on credit.