Which of the Following Reflects a Hedge of Net Receivables

question 23

Multiple Choice

Which of the following reflects a hedge of net receivables in British pounds by a U.S. firm?

• A) purchase a currency put option in British pounds.
• B) sell pounds forward.
• C) borrow U.S. dollars, convert them to pounds, and invest them in a British pound deposit.
• D) A and B

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Definitions:

Type I Error

The mistaken dismissal of a valid null hypothesis, commonly known as a "false positive."

Significance Level

The probability of rejecting the null hypothesis in a statistical test when it is actually true; often denoted by alpha.

Effect Size

A quantifiable measure of the magnitude of the difference between groups or the strength of a relationship in research findings.

Cohen

A surname often associated with statistical measures of effect size, such as Cohen's d for measuring the difference between two means.