Kalons Ltd

question 75

Multiple Choice

Kalons ltd. is a UK-based MNC that frequently imports raw materials from Canada. Kalons is typically invoiced for these goods in Canadian dollars and is concerned that the Canadian dollar will appreciate in the near future. Which of the following is not an appropriate hedging technique under these circumstances?

• A) Purchase Canadian dollars forward
• B) Purchase Canadian dollar futures contracts
• C) Purchase Canadian dollar put options
• D) Purchase Canadian dollar call options

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Definitions:

Import

Goods or services brought into one country from another for sale.

Exchange Rate

The price of one country's currency in terms of another country's currency, affecting imports, exports, and international investment.

Dollar-Yen

Refers to the currency exchange rate between the U.S. dollar and the Japanese yen, indicating how many yen can be exchanged for one dollar.

Exported

Items or services exported from one country to another for commercial purposes.