A6. Answer the following multimple choice question No explanation is needed. Only choose the correct answer. 1 mark each. Total Mark 3

1. To hedge _____, a forward contract can be obtained to _____the foreign currency forward. Alternatively, a _____option contract can be used.

1 point

1. receivables; buy; put
2. receivables; sell; call
3. receivables; sell; put
4. payables; buy; put

2. The cost of capital is the ____ rate of return an investment project must generate in order to pay its ____ costs.

1 point

1. maximum;operating
2. minimum;financing
3. maximum;financing
4. minimum;operating

3. Translation exposure reflects:

1 point

1. the exposure of a firm's cash flows to exchange rate fluctuations
2. the exposure of a firm's ongoing international transactions to exchange rate fluctuations
3. the exposure of a firm's consolidated financial statements to exchange rate fluctuations
4. the exposure of a firm's local currency value to transactions between foreign exchange traders