Your Firm, Which Operates in Canada and Has a Contractual

question 33

Multiple Choice

Your firm, which operates in Canada and has a contractual payment of £1 million due in three months.Which of the following methods would be considered speculative regarding your exchange-rate risk?

• A)Buy 1 million pounds now at the current spot rate.
• B)Buy 1 million pounds in three months at the current spot rate.
• C)Contract forward to buy 1 million pounds in three months.
• D)Borrow Dollars, convert to pounds at spot, invest for three months.

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Definitions:

Mean Square

A measure used in statistics that represents the average of the squares of the differences from the mean, often used in the context of variance and regression analysis.

Treatments

In the context of experiments, interventions applied to subjects or conditions under study to observe potential changes.

Mean Square

The average of the squared differences from the mean, used in variance and ANOVA calculations.

Error

The difference between a measured or observed value and the true value, indicating inaccuracies in data collection or analysis.