If an Exporter Believes the $A Is Going to Rise

question 74

Multiple Choice

If an exporter believes the $A is going to rise in three months when it receives payment for a shipload of its good, it may decide to:

• A) enter the short-term money market to hedge against this.
• B) borrow money in the interim.
• C) enter the futures market to hedge against this.
• D) buy Treasury notes in the interim.

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Definitions:

Credit Default Swap

A financial derivative allowing an investor to "swap" or offset their credit risk with that of another investor.

CDS

CDS stands for Credit Default Swap, a financial derivative allowing an investor to "swap" or offset their credit risk with that of another investor.

Coupon Bond

A type of bond that offers interest payments through coupons to the bondholder until its maturity, when the principal amount is reimbursed.

Accrued Interest

The interest that has accumulated on a bond since the last interest payment up to, but not including, the purchase (or sale) settlement date.