A USExport Company Scheduled to Receive 1 Million Pounds Six Months

question 51

Multiple Choice

A U.S.export company scheduled to receive 1 million pounds six months from today can hedge its foreign exchange risk by:

• A) Buying today 1 million pounds in the forward market for delivery in six months
• B) Buying 1 million pounds in the spot market for delivery in six months
• C) Selling 1 million pounds in the spot market for delivery in six months
• D) Selling today 1 million pounds in the forward market for delivery in six months

---

Definitions:

Overfishing

The unsustainable harvesting of fish species at a rate faster than they can reproduce, leading to declining populations.

Reduce Costs

Strategies or actions taken by businesses to decrease expenses and improve profitability without compromising the quality of their products or services.

Allocation

The process of distributing resources, goods, or services according to a specific plan or system.

Productivity

A measure of average output or real output per unit of input. For example, the productivity of labor is determined by dividing real output by hours of work.