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Andru [333]
3 years ago
15

Even if the use of a forward contract for hedging prevents a loss (or gain) from exchange rate changes on the hedged item, which

of the following may result in a cost to an entity that uses forward contracts for hedging purposes?
I. Fees imposed by the counterparty to the forward contract.
II. A difference between the spot rate and the forward rate when the forward exchange contract is executed.

a) I only.

b) II only.

c) Both I and II.

d) Neither I nor II.
Business
1 answer:
Liono4ka [1.6K]3 years ago
6 0

Answer:

a) i only.

Explanation:

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Answer:

lower investment and raise the interest rate.

Explanation:

If consumers have positive economic expectations, then their marginal propensity to consume (MPC) will increase. That means that for every disposable dollar, a greater proportion will be used to consume goods and services and a smaller proportion will be left for savings.

Since private savings = investment, as the MPC increases, investment decreases. Since total savings decreases, the total amount of money available for borrowing and investing will decrease. Since the supply of available funds decreases, then the price of money (interest rate) will increase.

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Suppose that the reserve ratio is 10% when the Fed sells $25,000 of U.S. Treasury bills to the banking system. If the banking sy
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d $250,000; subtracted from

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