26. Corporation X is hedging quarterly receivables of its German subsidiary by signing ten futures contracts at the CME. By the end of the contract the subsidiary reported a net remittance of EUR 1.2 million. This is an example of

a. Over hedge.

b. Under hedge.

c. Perfect hedge.

d. Not enough information is given to answer the question.

27. Which of the following statements is incorrect?

a.Transaction exposure is somewhat offset when two inflow currencies are highly positively correlated.

b.Transaction exposure is somewhat offset when an inflow, an outflow currencies are highly positively correlated.

c.Transaction exposure is somewhat offset when two outflow currencies are highly negatively correlated.

d.Transaction exposure is somewhat offset when two inflow currencies are highly negatively correlated.