Which of the Following Is an Example in Which a Firm

question 19

Multiple Choice

Which of the following is an example in which a firm might be indifferent between liability and risk management choices?

• A)Taking a long position in the futures contract,a long position in a call option and a short position in the underlying asset
• B)Taking a long position in the futures contract and a short position in the underlying asset
• C)Borrowing in floating rates,enter into a floating-to-fixed interest swap and lending in floating rates
• D)Borrowing foreign currency and swapping the foreign currency debt for a local currency obligation

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Definitions:

Cost Per Equivalent Unit

A calculation used in process costing that determines the cost associated with a single unit of output, adjusting for partial completion of units in the production process.

Materials Cost

The cost of raw materials used to produce goods.

Process Costing

A method of costing that is used in industries where production is continuous and the product is indistinguishable from unit to unit.

Equivalent Units

A concept used in cost accounting to represent the amount of work done on partially finished goods, converted into the number of fully finished units.