The corporate treasury should charge ______ for hedging the currency risk exposures of individual business units within the firm.
A) historical cost prices
B) market prices
C) reservation prices
D) the same price regardless of when the transactions are executed
E) the most that the division can afford

Question

Quizplus · Accepted Answer

The corporate treasury should charge market prices for hedging the currency risk exposures of individual business units within the firm. Market prices reflect the current market conditions and are a fair price to charge for the services provided. Historical cost prices may not accurately reflect current market conditions, reservation prices may not be fair to the business units, and charging the same price regardless of when the transactions are executed may not account for changes in market conditions. Charging the most that the division can afford may also not be fair and may not accurately reflect the true value of the services provided.

The Corporate Treasury Should Charge ______ for Hedging the Currency