Your US Firm Has an Accounts Payable Denominated in UK Pounds

question 2

Multiple Choice

Your U.S firm has an accounts payable denominated in UK pounds due in 6 months. To protect yourself against unexpected changes in the dollar/pound exchange rate you should:

• A) buy a pound put option.
• B) sell a pound put option.
• C) buy a pound call option.
• D) sell a pound call option.

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Definitions:

Histogram

A type of bar chart used in statistics to represent the distribution of data by showing the number of data points that fall within a range of values.

Normally Distributed Curves

Graphical representations of a normal distribution, showing how data points are symmetrically distributed around the mean.

Mean

A statistical measure representing the average value in a set of numbers, calculated by dividing the sum of all values by the number of values.

Median

The middle value in a list of numbers, which divides the dataset into two halves.