If a U.S. firm desires to avoid the risk from exchange rate fluctuations, and it will need C$200,000 in 90 days to make payment on imports from Canada, it could: A. obtain a 90-day forward purchase contract on Canadian dollars. B. obtain a 90-day forward sale contract on Canadian dollars. C. purchase Canadian dollars 90 days from now at the spot rate. D. sell Canadian dollars 90 days from now at the spot rate.
If a U.S. firm desires to avoid the risk from exchange rate fluctuations, and it will need C$200,000 in 90 days to make payment on imports from Canada, it could: A. obtain a 90-day forward purchase contract on Canadian dollars. B. obtain a 90-day forward sale contract on Canadian dollars. C. purchase Canadian dollars 90 days from now at the spot rate. D. sell Canadian dollars 90 days from now at the spot rate.
Chapter6: Government Influence On Exchange Rates
Section: Chapter Questions
Problem 4ST
Related questions
Question
If a U.S. firm desires to avoid the risk from exchange rate fluctuations, and it will need C$200,000 in 90 days to make payment on imports from Canada, it could:
A. obtain a 90-day forward purchase contract on Canadian dollars.
B. obtain a 90-day forward sale contract on Canadian dollars.
C. purchase Canadian dollars 90 days from now at the spot rate.
D. sell Canadian dollars 90 days from now at the spot rate.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Intermediate Financial Management (MindTap Course…
Finance
ISBN:
9781337395083
Author:
Eugene F. Brigham, Phillip R. Daves
Publisher:
Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Intermediate Financial Management (MindTap Course…
Finance
ISBN:
9781337395083
Author:
Eugene F. Brigham, Phillip R. Daves
Publisher:
Cengage Learning