​Which of the Following Is the Most Likely Strategy for a U.S

question 132

Multiple Choice

​Which of the following is the most likely strategy for a U.S. firm that will be receiving Swiss francs in the future and desires to avoid exchange rate risk (assume the firm has no offsetting position in francs) ?

• A) ​Purchase a call option on francs.
• B) ​Sell a futures contract on francs.
• C) ​Obtain a forward contract to purchase francs forward.
• D) ​All of the above are appropriate strategies for the scenario described.

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Definitions:

Conversion Costs

Expenses related to converting raw materials into finished products, typically encompassing labor and overhead costs.

Conversion Costs

Expenses directly related to converting raw materials into finished goods, including labor and manufacturing overhead.

Weighted-Average Method

An inventory valuation method using the weighted average of all items in inventory to determine the cost of goods sold and ending inventory value.

Cost System

A methodical process for recording, measuring, and analyzing costs associated with a company's operations, aiding in financial planning and control.