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__________ says to recognize the value of hidden optionsin a situation, such as

ID: 2662122 • Letter: #

Question

__________ says to recognize the value of hidden optionsin a situation, such as the foreign exchange options in somederivative instruments.

A.

The Principle of Comparative Advantage

B.

The Time Value of Money Principle

C.

The Principle of Two-Sided Transactions

D.

The Options Principle

__________ says to look for opportunities to invest inpositive-NPV projects in foreign markets or to develop derivativesor design arrangements that enable firms to cope better with therisks they face in their foreign operations.

A.

The Principle of Risk-Return Trade-off

B.

The Principle of Diversification

C.

The Principle of Valuable Ideas

D.

The Principle of Capital Market Efficiency

__________ says to use derivatives to pay others to takerisks.

A.

The Principle of Two-Sided Transactions

B.

The Signaling Principle

C.

The Principle of Self-Interested Behavior

D.

The Principle of the Time Value of Money

__________ says to recognize the value of hidden optionsin a situation, such as the foreign exchange options in somederivative instruments.

A.

The Principle of Comparative Advantage

B.

The Time Value of Money Principle

C.

The Principle of Two-Sided Transactions

D.

The Options Principle

__________ says to look for opportunities to invest inpositive-NPV projects in foreign markets or to develop derivativesor design arrangements that enable firms to cope better with therisks they face in their foreign operations.

A.

The Principle of Risk-Return Trade-off

B.

The Principle of Diversification

C.

The Principle of Valuable Ideas

D.

The Principle of Capital Market Efficiency

__________ says to use derivatives to pay others to takerisks.

A.

The Principle of Two-Sided Transactions

B.

The Signaling Principle

C.

The Principle of Self-Interested Behavior

D.

The Principle of the Time Value of Money

Explanation / Answer

Answer: ABA