If You Sell Forward USD to a Client Against EUR

question 539

Multiple Choice

If you sell forward USD to a client against EUR, what is the first thing you should do to cover your exposure to exchange rate movements?

• A) Sell and buy USD in the FX swap market
• B) Sell USD in the spot market
• C) Buy USD in the spot market
• D) Buy and sell USD in the FX swap market

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Definitions:

Standard Deviation

A measure of the dispersion or variability of a set of data points, indicating how spread out the data are from their mean.

Subtract

The action or method of deducting one number or quantity from another.

Variance

A statistical measure of the dispersal or spread of a set of numbers, indicating how much the numbers vary from the average of the set.

Represent

To depict or stand in for a population or set of data in a study or analysis.