Refer to the Above Figure

question 38

Multiple Choice

Refer to the above figure. Which point or points represent(s) a long-run equilibrium?

• A) A only
• B) B only
• C) C only
• D) both A and B

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Definitions:

Hedge Accounting

A method of accounting where entries for the ownership of a security and the opposing hedge are treated as one. It aims to reduce the volatility seen in financial statements.

Hedge Relationship

A connection between a hedging instrument and the risk it is intended to offset, ensuring that changes in the value of one are counterbalanced by changes in the other.

Exchange Gain

A profit resulting from holding or transacting in foreign currencies as exchange rates vary.

Spot Rate

The existing selling or buying price of a certain currency for transactions that are completed right away.