Because of the Greater Exchange Rate Risk with Flexible Exchange

question 21

Multiple Choice

Because of the greater exchange rate risk with flexible exchange rates,

• A)U.S. exporters can use foreign exchange forward and futures agreements to lock in today the amount of dollars to be received at the date the transaction is completed.
• B)futures markets are made illegal in international trade.
• C)contracts have to be written at a "reasonable" size to eliminate the paperwork with smaller contracts.
• D)futures markets increase the negative impact of flexible exchange rates on trade.

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