When a Buyer Locks in an Exchange Rate and Avoids

question 33

Multiple Choice

When a buyer locks in an exchange rate and avoids the risk of currency fluctuations, it is called:

• A) the spot market.
• B) the gray market.
• C) vertical purchasing.
• D) hedging.
• E) factoring.

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Definitions:

Sale Itself

An actual transaction or agreement where a seller agrees to transfer ownership of goods or property to a buyer for a price.

Contingent on Approval

Depending on the granting of approval or permission by a relevant authority or party before proceeding or becoming effective.

Goods-In-Bailment Contract

A type of contract in which the purchased goods are in some kind of storage under the control of a third party, such as a warehouseman.

Negotiable Document of Title

A document that guarantees the delivery of goods and can be transferred by endorsement to another party, facilitating the trading of goods without physical movement.