if you are an exporter to the UK and would like to hedge. a. you are...
if you are an exporter to the UK and would like to hedge.
a. you are afraid of price of pound going up
b. you are afraid pf price of pound going down
c. you are expecting price of pound going up
d. you are expecting price of pound going down
Homework Answers
Hello Sir/ Mam
YOUR REQUIRED ANSWER IS OPTION A : you are afraid of price of pound going up
If I am exporter to the UK, then I'll be receiving the future payment in Pounds and hence, will be converting it to my local currency. I should focus on maximizing my revenue in local currency. Hence, I'll be afraid of getting lesser of my currency and it will happen if pound appreciate. Hence, I'll be hedging the upside of pound.
I hope this solves your doubt.
Feel free to comment if you still have any query or need something else. I'll help asap.
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