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In a Forward Hedge, If the Forward Rate Is an Accurate

question 64

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In a forward hedge, if the forward rate is an accurate predictor of the future spot rate, the real cost of hedging payables will be:​


Definitions:

ATC

Average Total Cost, which is calculated by dividing the total cost of production by the quantity of output produced.

Price Elasticity Of Demand

The ratio of the percent change in the quantity demanded to the percent change in the price as we move along the demand curve.

Price Discrimination

The approach of marketing identical products to various customers at various prices, determined by their readiness to pay.

Network Externalities

The effect that an additional user of a good or service has on the value of that product to others.

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