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Supplementary objective test questions

6.5 Which of the following statements concerning methods of hedging foreign
exchange transaction risk is incorrect?

A Forward exchange contracts are a way of guaranteeing the exchange rate
that will be used for the currency transaction.

B Futures contracts can be dealt with in whole or part to ensure that the exact
transaction total is covered.

C Futures contracts are settled in three-monthly cycles.

D Currency options can be abandoned if the rate of exchange moves in a
favourable way.

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