To hedge a____ in a foreign currency, a firm may ____ a currency futures contract for...
To hedge a____ in a foreign currency, a firm may ____ a currency
futures contract for that currency.
O receivable: sell
O receivable; purchase
O payable: sell
O payable: purchase
○ A and D are both correct
Homework Answers
Answer
A and D are both correct.
To Hedge fully protect an existing position from an undesriable move in the currency pair by holding both a short and a long position simultaneously on the same currency pair.
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To hedge a____ in a foreign currency, a firm may ____ a currency
futures contract for...
Q3) If you have a long position in a foreign currency, you can hedge with A)...
Q3) If you have a long position in a foreign currency, you can hedge with A) a short position in a currency forward contract. B) borrowing in the domestic and foreign money markets. C) a short position in an exchange-traded futures option. D) a short position in foreign currency warrants Q4) If you owe a foreign currency denominated debt, you can hedge with A) a long position in a currency forward contract, or buying the foreign currency today and investing...
Currencies – U.S. dollar foreign-exchange rates. May 5, 2011 Country/currency………..in US$..............per US$ British Pound……………….1.5347…………….0.6516 Norwegian Kroner……….0.1690……………..5.9173...
Currencies – U.S. dollar foreign-exchange rates. May 5, 2011 Country/currency………..in US$..............per US$ British Pound……………….1.5347…………….0.6516 Norwegian Kroner……….0.1690……………..5.9173 Thai Baht……………………..0.0310……………..32.250 Mr. Charles imports light bulbs from Norway to the United States. He has a contract to purchase from a Norwegian firm 10,000 light bulbs that he plans to sell in Chicago in 30 days. Assuming that futures trading exists between U.S. dollars and Norwegian Kroner, how can Mr. Charles use such a market to hedge foreign currency risk? a. Contract to sell...
a Forward contract i. When do we create the forward contract to buy foreign currency? ii....
a Forward contract i. When do we create the forward contract to buy foreign currency? ii. When do we create the forward contract to sell foreign currency? b. Futures contract i. When do we create the futures contract to buy foreign currency? ii. When do we create the futures contract to sell foreign currency?
Currency futures may be purchased to hedge _______ or to capitalize on the expected _______ of...
Currency futures may be purchased to hedge _______ or to capitalize on the expected _______ of that currency against the dollar. receivables, appreciation receivables, depreciation payables, depreciation payables, appreciation
a)Should a U.S. firm take a long or short position in British Pound futures if it...
a)Should a U.S. firm take a long or short position in British Pound futures if it wants to hedge against payables in British Pound? Explain you answer. b)Should a U.S. firm buy a call option or buy a put option on Japanese Yen if it wants to hedge against receivables in Japanese Yen? Explain your answer. c)What are the main differences between forward/futures vs. options as a hedging tool? d) Assume that the transactions listed in the first column of...
A currency futures contract is a financial derivative that derives its value from an underlying asset....
A currency futures contract is a financial derivative that derives its value from an underlying asset. The underlying asset in a currency futures contract is: Multiple Choice None of the options. domestic currency. a call or put option written on foreign currency. a futures contract on the foreign currency. foreign currency.
A currency futures contract is a financial derivative that derives its value from an underlying asset....
A currency futures contract is a financial derivative that derives its value from an underlying asset. The underlying asset in a currency futures contract is: Multiple Choice a call or put option written on foreign currency. None of the options. foreign currency. a futures contract on the foreign currency. domestic currency.
Class Example-A Short Hedge It is May 15. An oil producer has negotiated a contract to...
Class Example-A Short Hedge It is May 15. An oil producer has negotiated a contract to sell 1 million barrels of crude oil. The price in the sales contract is the spot price on August 15. The current spot price of crude oil is $19.00 per barrel, and the August crude oil futures price is $18.75 per barrel. Each futures contract is for the delivery of 1, 000 barrels of crude oil. List the transactions with which the oil producer...
Ouestion 2Samson Corporation buys a foreign currency future contract as a hedging strategy to protect against...
Ouestion 2Samson Corporation buys a foreign currency future contract as a hedging strategy to protect against possible losses from fluctuations in a particular foreign exchange. This strategy suggests that Samson Corporation has: Not yet answered Marked out of 1 Select one: Flag question O a. Foreign accounts receivable and expects the exchange rate to rise b. Foreign accounts receivable and expects the exchange rate to fall. O c. Foreign accounts payable and expects the exchange rate to rise. O d....
Ouestion 2Samson Corporation buys a foreign currency future contract as a hedging strategy to protect against...
Ouestion 2Samson Corporation buys a foreign currency future contract as a hedging strategy to protect against possible losses from fluctuations in a particular foreign exchange. This strategy suggests that Samson Corporation has: Not yet answered Marked out of 1 Select one: Flag question O a. Foreign accounts receivable and expects the exchange rate to rise b. Foreign accounts receivable and expects the exchange rate to fall. O c. Foreign accounts payable and expects the exchange rate to rise. O d....
Q3) If you have a long position in a foreign currency, you can hedge with A) a short position in a currency forward contract. B) borrowing in the domestic and foreign money markets. C) a short position in an exchange-traded futures option. D) a short position in foreign currency warrants Q4) If you owe a foreign currency denominated debt, you can hedge with A) a long position in a currency forward contract, or buying the foreign currency today and investing...
Class Example-A Short Hedge It is May 15. An oil producer has negotiated a contract to sell 1 million barrels of crude oil. The price in the sales contract is the spot price on August 15. The current spot price of crude oil is $19.00 per barrel, and the August crude oil futures price is $18.75 per barrel. Each futures contract is for the delivery of 1, 000 barrels of crude oil. List the transactions with which the oil producer...
Ouestion 2Samson Corporation buys a foreign currency future contract as a hedging strategy to protect against possible losses from fluctuations in a particular foreign exchange. This strategy suggests that Samson Corporation has: Not yet answered Marked out of 1 Select one: Flag question O a. Foreign accounts receivable and expects the exchange rate to rise b. Foreign accounts receivable and expects the exchange rate to fall. O c. Foreign accounts payable and expects the exchange rate to rise. O d....
Ouestion 2Samson Corporation buys a foreign currency future contract as a hedging strategy to protect against possible losses from fluctuations in a particular foreign exchange. This strategy suggests that Samson Corporation has: Not yet answered Marked out of 1 Select one: Flag question O a. Foreign accounts receivable and expects the exchange rate to rise b. Foreign accounts receivable and expects the exchange rate to fall. O c. Foreign accounts payable and expects the exchange rate to rise. O d....
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