Robex Retail Forms a Contract with One of Its Suppliers

question 62

Multiple Choice

Robex Retail forms a contract with one of its suppliers to buy specific amounts of agricultural produce at a later date.This contract is an example of a(n) ________.

• A) financial future
• B) put option
• C) credit derivative
• D) call option
• E) commodities future

---

Definitions:

Transaction Exposure

The risk that the value of a company's foreign currency-denominated transactions will be adversely affected by exchange rate fluctuations.

Spot Rate

The existing market cost at which a specific asset is available for purchase or sale for instant delivery.

Forward Rate

The exchange rate specified in a forward exchange contract.

Premium

An amount paid for an insurance policy or an amount paid above the face value of a bond.