Suppose That the Greer Company Knows That It Must Pay

question 46

Multiple Choice

Suppose that the Greer Company knows that it must pay £7 million for goods that it will receive in England. The current exchange rate is $1.75£. The risk that the corporate Treasurer faces is that:

• A) the pound exchange rate falls in a month's time to $1.50£.
• B) the pound exchange rate rises in a month's time to $2.00£.
• C) the pound exchange rate does not change from its current position.
• D) the pound exchange rate falls in a month's time to $1.25£.

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