what do you see as the strongest moral consideration in favor of capitalism? what do you see as the strongest objection to it? how capitalist is our economic system today? what do you see as the major economic challenges facing our society today and, in particular, your generation?

Answers

Answer 1

Capitalism promotes the freedom to choose. It promotes the ability for people to choose what they want to buy, how much they want to spend, where they want to live, where they want to work, and so on.

What exactly is capitalism?

Capitalism is commonly thought of as an economic system in which private actors own and control property based on their interests, and demand and supply freely set market prices in a way that benefits society.

Because it protects a man's primary means of survival and success, capitalism is the only moral social system.

Many distinguishing characteristics of capitalism include a two-class system, private ownership, a profit motive, minimal government intervention, and competition.

THE TRUTH: Capitalism is the world's most humane economic system, promoting democratic values of a free and open society such as hard work, cooperation, generosity, charity, and adherence to the rule of law.

Hence, Capitalism promotes freedom of choice. It promotes the ability for people to choose what they want to buy, how much they want to spend, where they want to live, where they want to work, and so on.

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Answer 2

The strongest moral consideration in favor of capitalism is freedom to make choice, the strongest objection is exploitation.

What is capitalism advantages and disadvantages?Economic freedom, consumer choice, and economic progress are all benefits of capitalism. Buyers (people) and sellers make up the market-based economy in which we live (private or corporate-owned companies).The purpose of producing goods and services is to turn a profit, which is then put back into the economy.The free market should be left to choose investments, production, distribution, and decisions; government intervention is only permitted when establishing and enforcing laws or policies that regulate company behaviour.A capitalistic economy requires constant production and consumption to function properly.Capitalists contend that the government does not utilize resources as effectively as the private sector.The majority of the modern world, including the United States, is regarded as having a capitalist economy, but economists are quick to point out that practically every civilization includes some form of socialism.Possibility of a monopoly - Companies having monopolistic power (occurs when one person or company is the sole supplier of a given good) may abuse their position by imposing higher pricing.Inequality - The foundation of a capitalist society is the ability to transfer wealth to succeeding generations. Inequality and social division result if a small number of people control all the wealth, and that wealth is then passed down to the same groups of people.Unemployment and recession - An economy built on a market of consumers and producers will always suffer expansion and contraction.

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Related Questions

a company purchases merchandise with a catalog price of $29,000. the company receives a 35% trade discount from the seller. the seller also offers credit terms of 2/10, n/30. assuming no returns were made and that payment was made within the discount period, what is the net cost of the merchandise?

Answers

The net cost of the merchandise is $15080

Catalog price of the merchandise = $29,000.

Trade discount = 35%

Credit terms offer = 2/10, n/30

Thus,

The amount of trade discount = 35% of 29,000.

= 0.35 × 29,000

= 10150

Therefore,

Purchase cost of the product = $29,000 - $10150

= $18850

The amount of credit discount = 2% of $18850

= 0.02 × $18850

= $3770

therefore,

the net cost of the  merchandise = $18850 - $3770

= $15080

The terms "net cost" and "net price" can be used interchangeably. After all reductions and rebates have been applied, the customer's final payment is known as the net cost. Taxes and other supplemental expenses are not included. The net price, on the other hand, is the total cost the consumer pays and includes all additional fees.

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steele estimates that 10,000 direct labor-hours and 16,000 machine-hours will be worked during the year. the predetermined overhead rate per hour will be

Answers

Predetermined overhead rate per hour will be $4.25 per hour, if Steele estimates that 10,000 direct labor-hours and 16,000 machine-hours will be worked during the year.

What is Predetermined overhead rate?

The estimated cost of manufacturing overhead is applied to cost objects for a particular reporting period using an allocation rate called a predetermined overhead rate. Since this rate does not require the compilation of actual manufacturing overhead costs as part of the period-end closing process, it is frequently used to help close the books more quickly. But at the very least at the conclusion of each fiscal year, the discrepancy between the amounts of overhead that were estimated and actual must be reconciled.

Predetermined Overhead rate = estimated Manufacturing overhead / estimated Machine hours

Predetermined Overhead rate = $68,000 / 16,000 =$4.25 per hour

Machine-hours                               16,000

Manufacturing Overhead

Salary of production supervisor   $40,000

Indirect material                             $8,000

Rent on factory equipment           $20,000

Total Manufacturing overhead     $68,000

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Full question:

Steele Corporation uses a predetermined overhead rate based on machine-hours to apply manufacturing overhead to jobs. Steele Corporation has provided the following estimated costs for next year: Direct materials $ 20,000 Direct labor $ 60,000 Sales commissions $ 80,000 Salary of production supervisor $ 40,000 Indirect materials $ 8,000 Advertising expense $ 16,000 Rent on factory equipment $ 20,000 Steele estimates that 10,000 direct labor-hours and 16,000 machine-hours will be worked during the year. The predetermined overhead rate per hour will be ____________. A) $10.25B)$4.25C) $9.00D)$8.00

if the mortgage loan is 80% of the house purchase price and the interest rate of 6% amounts to $460 mortgage payment each month for 25 years, what is the house purchase price?

Answers

The house purchase price is mathematically given as

$68140

This is further explained below.

What is a mortgage payment?

Generally, Principal, interest, property taxes, and mortgage insurance are the basic components that make up a monthly mortgage payment. The Principal amount is the part of the payment that goes toward reducing the total amount still owed on the loan.

The cost of borrowing money is represented by the interest rate. Your interest rate and the outstanding balance on your loan are the two main factors that go into calculating the amount of interest you have to pay.

The equation of the principle amount is mathematically given as

[tex]P V=A\left[\frac{1-\left(\frac{1}{1+r}\right)^n}{r^{(p)}}\right][/tex]

Number of Periods/Years (n) = 15

Nominal Rate Of Interest (r(12)) = 0.06

Regular Withdrawal (A) = $5520

Therefore

[tex]\\P V=5520 * \frac{1-\left(\frac{1}{1+0.06168}\right)^{15}}{0.06} \\\\P V=\$ 54511.61675\end{gathered}[/tex]

Therefore

[tex]Price =54511.61675*(5/4)[/tex]

=68139.5209

=68140

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to take advantage of the massive amount of data now available, a sophisticated analysis technique called is becoming a priority for many firms.

Answers

To take advantage of the massive amount of data now available, a sophisticated analysis technique called data mining is becoming a priority for many firms.

         The term 'mining' comes from the action of extracting minerals from deep within the earth. Data mining also refers to the extraction and discovery of the distinct patterns present in sets of data. These patterns are then used for predicting future changes or outcomes.

         Data mining has some stages through which it does the extracting and predicting. They are data acquisition, cleaning, preparing, and transforming the data, analyzing, modeling, and forecasting data, and the final report.

         Since it carries on such an organized, maintained manner of data analysis, it is called a sophisticated analysis technique. Using data mining helps the company to have compact data and analysis in their hands which helps them to invest in the right channel.

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answer the question posed by the ceo of bricks ‘n’ bats. "where would it make sense for managers to have wide spans of control?" check all that apply. in shipping, where most employees are very experienced and highly trained in marketing, where most employees and contractors work out of their homes located across the country in manufacturing, where most employees perform similar tasks that don’t change much over time in logistics, where employees need to coordinate with several other areas to do their wo

Answers

Where it would make sense for managers to have wide spans of control include:

where most employees and contractors work out of their homes located across the country in manufacturing and

where employees need to coordinate with several other areas to do their work.

Who is a manager?

A manager is a person who supervises both activities and people within a given establishment. In other words, a manager is the person in charge of overseeing things that needs to get done. A manager normally controls both people and resources which could be physical resources, economic resources, among others and even all these resources together at the same time.

Therefore, the correct answer is as given above

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when commercial farming proposals have promised more jobs in zambia, why have there been job losses at the farm taken over by chayton capital?

Answers

The commercial farms have not offered assistance to the nearby subsistence farmers.

What is commercial farming?

Commercial farming is done to cultivate crops and cattle in order to gain money. Crops can be sold directly to consumers and businesses or processed into products like juices, jellies, pickles, and other foods.

Commercial agricultural practices: the raising of animals and food for market, frequently utilizing current technology.

Thus, The commercial farms have not offered assistance to the nearby subsistence farmers.

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jay and joyce meet george, the banker, to work out the details of a mortgage. they all expect that inflation will be 2 percent over the term of the loan, and they agree on a nominal interest rate of 6 percent. as it turns out, the inflation rate is 5 percent over the term of the loan. a. what was the expected real interest rate? b. what was the actual real interest rate? c. who benefited and who lost because of the unexpected inflation?

Answers

Jay and joyce meet george, the banker, to work out the details of a mortgage the loan, and they agree on a nominal interest rate of 6% . as it turns out, the inflation rate is 5 percent over the term of the loan

The lending of money by one or more people, businesses, or other entities to other people, businesses, or other entities is known as lending in the world of finance. The recipient, or borrower, incurs a debt and is often responsible for paying interest on that loan until it is returned in addition to the primary amount borrowed. In the field of economics, inflation refers to a general rise in an economy's prices for products and services.

a) Expected real interest rate is 6-2=4 percent

b)actual real actual=6-5=1%

c)Jay and Joyce benefit because higher inflation means that their money is worth more.

The promissory note or equivalent document used to prove the debt will typically include information such as the principle amount borrowed, the interest rate being charged by the lender, and the due date. The relevant asset(s) will be temporarily reallocated between the lender and the borrower as part of a loan.

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the company determines that the interest expense on a note payable for the period ending december 31 is $750. this amount is payable on january 1. journalize the entries required on december 31 and january 1. study

Answers

The face amounts of the promissory notes that a corporation has issued are recorded in the Notes Payable general ledger liability account. The sums that are still owed are represented by the balance in Notes Payable.

The journal entry to represent the receipt of the note proceeds is quite simple: raise the checking account to reflect the deposit and raise the Notes Payable long-term liabilities account.

$700 in a checking account $750 in Notes Payable

What sort of notes are considered payable?

Examples of notes payable include getting a loan from a bank, buying a house, and getting a business automobile. Depending on when the loan is due, notes payable may be referred to as either a short-term obligation (lt;1 year) or a long-term liability (lt;1+ year).

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the benefits of data warehouses a. provide a centralized view of all data being collected across the enterprise and provides a means for determining data that is inconsistent. b. generate one version of the truth. c. snapshots of data can be taken over time

Answers

The benefits of data warehouses a. provide a centralized view of all data being collected across the enterprise and provides a means for determining data that is inconsistent.

What is the benefit that can be associated to a data warehouse?

A data warehouse can be described as the system that is been designed to help to serves as the  centralized view of all data that is been used in an organization, however this could be the data that is been collected as well as the data that is been sent out or stored i n that database of the organization.

It should be noted that the data ware house help in the storage as well as the retrieval of data in the organization, however with the data ware house of the organization, the data are tends to be safe and allow thae data to be gotten at anytime it is wanted.

Therefore, option A is correct.

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toyota offers a different products that are promoted and priced differently to attract different groups of consumers. in fact, toyota distributes its lexus vehicles at a completely different place. this combination of product, price, place, and promotion is also known as the

Answers

This combination of product, price, place, and promotion is also known as the Marketing mix.

Marketing mix is defined as set of marketing tools which is used by management to achieve its objective. It helps to focus on the product.

Marketing mix refers to the 4 P's : product, place, price, promotion.

All the elements of marketing mix works in a conjunction with one another.

It helps to reach the wider customer groups, and helps to make strategic decisions.

Three additional P's are also added to the marketing mix that is people, process and physical evidence.

Product is defined as value given to to the customer whereas price is defined as value charged from customer for the product offered.

Place is the area where product is being sold.

Promotion refers to give information about the product to the respective people.

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marcella is self-employed. in 2022, she had the following business meal expenses: $1,000 spent for meals at restaurants with vendors and clients, and $200 spent for food at the grocery store. how much can marcella de

Answers

Answer:$1100

Explanation:

100% of what was reasonably spent on clients and vendors and 50% of personal spending at grocery and liquor stores.

macey is assessing market growth, market competitiveness, and market access for each segment she has identified. macey is evaluating the blank of each potential market segment.

Answers

Macey is evaluating the profitability of each potential market segment.

What is mean by market segment?Market segmentation in marketing refers to the division of a large consumer or corporate market into smaller consumer groups based on some sort of shared trait, typically consisting of current and future customers.By identifying which items have the best odds of capturing a share of a target market and choosing the most effective means of distributing those products to that market, market segmentation seeks to reduce risk.Although the four primary categories of market segmentation are thought to be geographic, demographic, psychographic, and behavioral, there are many more approaches you can take, as well as many variants on the four primary types.

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in pennsylvania, the broker is providing communication and document preparation services and is assisting both parties in a transaction without advocating for either party. this broker is a:

Answers

A transaction licensee brokers are mostly working in Pennsylvania as the broker without advocating for either party .

Who are Brokers ?

In order to earn a commission after the trade is completed, brokers organize transactions between buyers and sellers. Brokers that take on dual roles as buyers or sellers are considered primary parties to the transaction. Neither function should be mistaken with that of an agent, who represents the principal party in a transaction.

An impartial party whose services are often used in several businesses is a broker. The main duty of a broker is to connect buyers and sellers; as a result, the broker acts as a neutral intermediary between a buyer and a seller. A real estate or stock broker who helps in the sale of a property would be an example.

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One of the benefits of spending sizable sums of money for social responsibility initiatives and good corporate citizenship over a multi-year period is?.

Answers

One of the benefits of spending sizable sums of money for social responsibility initiatives and good corporate citizenship over a multi-year period is is the positive impact such spending has on increasing the company's image rating.

What is the benefit of social responsibility?

Social responsibility  can be described as the term that explain that  individuals as well as the companies  should be able to carry out activities while putting the interest of their environment as well as the society as a whole in their heart.

It should be noted that the idea of the Social responsibility help to know more about the company because if a company do not put the society as well as the environment into consideration while carry out their daily business activities, this could have a bad influence on the image of the company as well as the way the public is viewing the company , this can also applies to the individuals in the society at large.

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Mrs. Fitzpatrick wants to be the first teacher to travel from planet to planet in our solar system (she cray!). After she visits each planet, she plans to then try and land on an asteroid and then follow a comet that orbits our solar system. What unit of measure would Mrs. Fitzpatrick use to describe the distances she has traveled within the solar system?

Answers

The unit of measure which Mrs. Fitzpatrick would use to describe the distances she has traveled within the solar system is the Astronomical Units.

The Astronomical Unit is known to be the distance from the Earth to the Sun. So initially it thus varies dependent upon where the Earth has been but now it is said that they just use the average distance between the Sun and the Earth.

This Astronomical unit is used as the many distance calculations rely on thge parallax measurements. Thus, the distances to stars which are relatively close to the solar system are measured by observing changes in the position in sky.

Hence, such dimensions are quite simple to work out in Astronomical Unit.

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Question 4
Not-for-profit organizations are?

Answers

a group organized for purposes other than generating profit and in which no part of the organization's income is distributed to its members, directors, or officers.

Not-for-profit is a broad term for organizations that do not generate profit for their owners. All money generated by the not-for-profit business must be reinvested back into running it. Unlike nonprofits, not-for-profits are not required to operate specifically for the benefit of the public or the advancement of a social cause. A not-for-profit can simply operate to serve the goals or special interests of its members. For example, recreational sports clubs can operate as a not-for-profit.

Martinez co. Borrowed $50,000 on march 1 of the current year by signing a 60-day, 9%, interest-bearing note. Assuming a 360-day year, when the note is paid on april 30, the entry to record the payment should include a?.

Answers

The entry to record the payment should include debit to Interest Expense for $750.

What is an interest-bearing note?

A lender will lend money to a borrower on an interest-bearing note, and interest will be charged in accordance with the terms of the agreement. There are numerous uses for these notes. For instance, an account receivable may be changed into a note, under which a client is now regarded as a borrower and is responsible for making interest payments on what was once an account receivable. Another option is to get a mortgage, which requires a homeowner to commit to a protracted series of payments that, based on the terms, may contain both interest and principal payback components. A long-term loan to a business that is utilized to meet its funding needs over a number of years is a third example of an interest-bearing note.

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Which of the following describes a public
accountant?
A. Natalie prepares and files taxes for
individuals.
B. Darlene is an auditor for an
international manufacturing
company.
C. Chris is a fraud investigator for the
Government Accountability Office.
D. Jorge is a senior accountant at a
nonprofit organization.

Answers

D is correct. Jorge is the only one who is actually an accountant, and he works for a nonprofit, which is set to benefit the public.

Answer:

A. Natalie prepares and files taxes for individuals

Explanation:

Just took the test, hope this helps

at many airports, a person can pay only $1 for a $100,000 life insurance policy covering the duration of the flight. in other words, the insurance company pays $100,000 if the insured person dies from a possible flight crash; otherwise the company gains $1. suppose that past records indicate 0.45 deaths per million passengers. how much can the company expect to gain on one policy? on 100,000 policies?

Answers

Expected money gets by the company = premium received -expected payout

=100000-0.45*(100000/1000000) *100000 = 95500

Expected Monetary Value (EMV) is a venture control metric utilized in hazard evaluation for figuring out the general contingency reserve required for a venture plan. When you are making a plan, it may cross higher or worse than you expected.

The EMV PMP examination method in its best shape is a three-step process: Determine the probability (P) a final result will occur.  Determine the economic fee or impact (I) of the final results. Multiply P x I to calculate the EMV.

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which of the following government offices help individuals fund their college education?
office of educational technology
office of postsecondary education
office of vocational and adult education
office of federal student aid

Answers

Answer:The office of Federal Student Aid

Explanation:

The office of Federal Student Aid provides approximately $112 billion in grant, work-study, and loan funds each year to help pay for college or career school.

Hope that helped! :D

Comparing and contrasting sets of data in order to rank them and make a decision best defines _____. a. personal information b. evaluation c. career information d. personal career profile please select the best answer from the choices provided a b c d

Answers

Comparing and contrasting sets of data in order to rank them and make a decision best defines b. evaluation.

We can define evaluation as checking of a data or documents to see if everything in it is written correctly. The evaluation also refers to comparing multiple data or documents in order to source out the best amongst them.

Evaluation is not only used in business but in everyday life to sort out the best thing for users.

By evaluation, a business tends to rely on the best data that can help it to approach its goal. Every aspect of a business needs to be properly evaluated for the proper outgrowth of a business.

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a conflict of interest in research could result when a physician is paid as a consultant for a pharmaceutical company and also conducts human subject research with that same company.

Answers

False, since both roles are in the capacity of research and does not compromise results. So there is no conflict of interest in research.

Conflicts of interest are situations in which professional judgments or actions regarding a primary concern, such as a medical researcher's responsibilities, may be easily persuaded by a secondary interest, such as monetary benefit or professional advancement.

Many doctors work full-time for biotech and pharmaceutical companies, as well as medical device manufacturers. They work in research, product development, or administration. In fact, a few of them own the businesses. This is not conflict of interest.

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zahra, the human resources manager, has significant experience handling ethical issues in the workplace. over the years she has received extensive training in matters of workplace ethics. due to zahra’s legal background (she is a member of the state bar association), the management of her company rely on zahra to assist them with legal issues, especially with ethical dilemmas. her organization should appoint zahra as the

Answers

As Zahra, the human resources manager already has a significant experience handling ethical issues in the workplace and over the years, she has received also extensive training in matters of workplace ethics. Because of this, her organization should appoint her as an ethics officer.

What is the role of ethics officer?

In a workplace, the ethics officer refers to the officer who aligns the practices of a workplace with the stated ethics & beliefs of that workplace while as well, holding the people accountable to ethical standards. Most often, the ethics officer focuses on maintaining an ethics and compliance within a particular workplace.

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scholars found that spirituality affects employee and organizational performance in what way? negatively. positively. has no affect. only affects not-for-profit organizations

Answers

Scholars found that spirituality affects employee and organizational performance in positively way.

Spirituality is a method that allows a person to connect with himself and to feel peaceful. When a person has achieved his peace, he will have a positive approach toward life and can perform better at work.

Spirituality causes employees to have a positive mind. Such a positive mind helps to improve the performance of employees and the organization on the whole.

Conducting research has proved to scholars that spirituality can better enhance employees and an organization on the whole.

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if $12,000 is invested in an account that earns 3.95% compounded continuously, find the instantaneous rate of change of the amount in the account after 5 years.

Answers

The total amount from compound interest on an original principal of $12,000.00 at a rate of 3.95 % per year compounded continuously over 5 years exists $ 12,023.7234.

What is meant by Compound Interest?

Compound interest can be thought of as the addition of the loan's interest to the deposit's principal amount.

The formula for Compound Interest Compounded continuously is given as A = P[tex]$$e^{rt[/tex]

A = Amount after t years

r = Interest rate = 3.95%

t = Time after t years = 5

P = Principal = Initial amount invested = $12,000

First, convert R percent to r a decimal

r = R/100

substitute the value of R in the above equation, we get

r = 3.95% / 100

r = 0.000395 per year

The formula for Compound Interest Compounded continuously be,

A = P[tex]$$e^{rt[/tex]

substitute the value in the above equation, we get

A = 12,000 × [tex]$e^{(0.000395 \times 5)[/tex]

A = $ 12,023.7234

The total amount from compound interest on an original principal of $12,000.00 at a rate of 3.95 % per year compounded continuously over 5 years is $ 12,023.7234.

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What is viability factors researches the demand for products or services?

Answers

Answer:

Viability is a mass noun that refers to something's capacity or potential for success. It may be a demand, an idea, a project, or even a plan to change how a business runs. Establishing viability is the goal of a viability evaluation. Product viability is the capacity of a software product to maintain itself or reach its potential.

Explanation:

The term "market viability" describes the commercial potential of a certain market. You may decide whether starting a business in a specific market makes financial sense with the use of a market viability analysis.

Industry size: Is there adequate room on the market for new vendors? Exists room for improvement?

Target market: Do potential customers have more money to spend? Can they afford to purchase your offering?

Competition: Who are the major retailers in this industry, in terms of competition? What are their advantages and disadvantages? How are you going to rival them?

Your objective is to eliminate any markets that are too small, too competitive, or comprised of clients who are unable or unable to pay your prices.

oger works as a sales manager for hi-tech solutions, a company that performs software consulting services. while working for hi-tech, roger started a side business doing software consulting work and made $50,000 in it over the course of three years. roger never informed hi-tech of his lucrative side business. if a court finds that roger breached his duty of loyalty and orders him to pay hi-tech the $50,000 in profits he earned from his secret business, this is known as multiple choice disgorgement. restoration. reinstatement. replenishment.

Answers

A right answer is an option (a), which is disgorgement.

What does disgorgement mean?

Disgorgement is described as "the act of giving up something on demand or under legal coercion" in Black's Law Dictionary. A party who makes money via unlawful or improper behavior is required to forfeit whatever profits they have made as a result of that unlawful or improper behavior. This remedy is called disgorgement. By making illegal activity unprofitable, this remedy aims to prevent unfair gain.

An example of a penalty that is meted out to people who have accumulated wealth illegally is disgorgement. It calls for giving up or returning all gains or funds obtained by unethical business practices to individuals who were harmed by the transaction.

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the adult working-age population is 249.7 million, 67.8 million of whom are not in the labor force. what is the labor force participation rate? (round your answer to the nearest 10th)

Answers

The adult working-age population is 249.7 million, 67.8 million of whom are not in the labor force, the labor force participation rate is 27.1525831%

Given

Total population = 249.7 million

Labour force = 67.8 million

Let

Labour Force Participation Rate       = Labour force / Total population

                                                             = 67.8 / 249.7

                                                             = 0.271525831

Labour Force Participation Rate (%)  = 0.271525831 × 100

                                                              = 27.1525831 %

A measure of how many people are actively employed in an economy is the labor force participation rate. The calculation is the proportion of the working-age population who are either employed or actively looking for work and who are not in institutions.The percentage of persons who are working or actively looking for employment across the whole population is known as the labor force participation rate.It can provide some perspective on the status of the economy when paired with the unemployment rate data.

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alt-labor community-based organizations seek to win gains for nonunion workers through education, protests, lobbying, lawsuits, and corporate campaigns.

Answers

The statement is True.

The required details about alt-labor is mentioned below.

The informal alliance of groups known as "alt-labor" is working to enhance workers' rights in the face of a decline in union membership.

The labor reform movement's strategy.

Alternative labor community-based organizations work to advance the interests of nonunion employees through advocacy, corporate campaigns, protests, and education.

For workers in the industrial sector, organized labor unions fought for better pay, more flexible scheduling, and safer working conditions. Initiatives to stop child labor, provide health benefits, and assist wounded or retired workers were led by the labor movement.

The labor movement aims to guarantee that workers are fairly compensated for their effort. Unions aim to improve working conditions and pay while also limiting the excessive executive salaries.

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1. hedging with currency options when would a u.s. firm consider purchasing a call option on canadian dollars for hedging? when would a u.s. firm consider purchasing a put option on canadian dollars for hedging? (1 point)

Answers

A U.S. firm would consider purchasing a call option on the Canadian dollars when it is expected that the Canadian dollars would appreciate.

What is a call option?

A call option is a derivative option that gives the holder of the call option the right and not the obligation to buy an asset at a predetermined price known as the strike price. The call option would be exercised if the current price of the asset is higher than the strike price.

For example assume that the exchange rate of the CAD and the US dollar is 0.80 CAD to 1 dollar. Assume that it is expected that the CAD would appreciate in value inn the future. A US investor could decide to buy a call option with a strike price of 0.85 CAD to 1 dollar. Assume that at the time of the expiration of the call option, the exchange rate is 0.90 CAD to 1 dollar. The US firm would exercise the call option and exchange the currency at 0.85 CAD to 1 dollar.

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