Question：What is meant by structural hedging?

　　A. Trying to ensure as far as possible that a company has matching amounts of assets and liabilities in any currency, so as to reduce currency exposures.

　　B. Carrying out an annual review of the organisation's risks, and planning a risk management strategy to deal with them.

　　C. Using the financial derivatives markets to hedge exposures to financial risks.

　　D. Managing the financial gearing of the company, to ensure that the company is always in a position to meet its debt payment obligations and have scope for further borrowing if needed.

　　The correct answer is: Trying to ensure as far as possible that a company has matching amounts of assets and liabilities in any currency, so as to reduce currency exposures.

　　解析：Structural hedging is a form of hedging currency risks through matching. Matching involves setting receipts in one currency against expenditures in the same currency: if these match exactly, currency risk is eliminated. Structural hedging is concerned with matching assets and liabilities in any currency. For example, if a manufacturing company has large amounts of income in US dollars, it should site its production facilities in the US or a country whose currency is tied to the US dollar.

　　Question：Which of the following is not a problem with international codes of practice?

　　A. They represent a set of general, not very tough, principles.

　　B. Attempts to strengthen the principles will be difficult because of differences in legal structures, financial systems and corporate ownership.

　　C. They have no legislative power.

　　D. They cannot be used by countries wishing to develop their own codes.

　　E. They lag behind changes in the most advanced countries.

　　The correct answer is: They cannot be used by countries wishing to develop their own codes.

　　解析：Because they are based on global best practice and are drafted in

　　general terms, they are a good basis for development of local codes.