A Foreign Manufacturer Must Make a $2 Million Payment to Its

question 10

Multiple Choice

A foreign manufacturer must make a $2 million payment to its Canadian supplier in 60 days.Which of the following is correct?

• A)The firm hopes that the Canadian Dollar appreciates within the 60 days.
• B)The firm's exchange rate risk is hedged.
• C)The firm faces contractual exchange rate risk.
• D)The current spot exchange rate is likely to be trading at a premium.

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Definitions:

Spinal Cord

A long, thin, tubular structure made up of nervous tissue, extending from the brain, serving as the main pathway for information connecting the brain and peripheral nervous system.

Autonomic Nervous System

The part of the nervous system that controls involuntary functions such as heartbeat, digestion, and breathing.

Voluntary Nervous System

Part of the nervous system responsible for the control of voluntary movements and the communication of sensory information to the CNS.

Sympathetic Division

A part of the autonomic nervous system that activates the body's fight or flight response during stressful or emergency situations.