If Payment on a Transaction Is to Be Made Immediately

question 2

Multiple Choice

If payment on a transaction is to be made immediately, the purchaser has no choice other than to buy foreign exchange on:

• A)the spot market.
• B)the forward market.
• C)a hedge.
• D)a future date invoice.
• E)an exchange rate pass-through.

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Definitions:

Marginal Cost

The hike in cost resulting from the creation of one more unit of a product or service.

Cartel

An agreement among competing firms to control prices or exclude entry of a new competitor in a market, often leading to higher prices and restricted supply.

Marginal Cost

The hike in overall financial outlay due to producing an extra unit of a product or service.

Total Industry Profit

The cumulative profit earned by all companies operating within a specific industry.