Your Firm Will Be Importing a Large Order of Its

question 65

Multiple Choice

Your firm will be importing a large order of its inputs from the United States in six months and is concerned that the Canadian dollar might fall against the U.S.dollar over that time.To hedge your risk,you decide to enter into a currency forward contract to purchase 500,000 USD at a rate of 1.0232 CAD/USD.If the spot exchange rate in six months' time ends up being 0.9967 CAD/USD,what is your gain or loss from hedging compared to remaining unhedged?

• A)$0
• B)$12,992
• C)$13,250
• D)-$13,250
• E)-$12,992

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Definitions:

Forward Facing

Oriented towards the front; often refers to the positioning of child car seats or the direction of progress.

Infant Car Seat

A specially designed seat for infants used in vehicles for protection during travel, typically facing the rear of the car.

Automobile

A wheeled motor vehicle used for transportation of people or goods on roads.

Sentinel Event

A significant, unexpected occurrence involving death or serious physical or psychological injury in healthcare, triggering immediate investigation and response.