If a Firm Is Due to Be Paid in Euros

question 53

Multiple Choice

If a firm is due to be paid in euros in two months,to hedge against exchange-rate risk the firm should ________ foreign exchange futures ________.

• A)sell;short
• B)buy;long
• C)sell;long
• D)buy;short

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Definitions:

Foreign Investment

Investment by individuals or companies in assets or businesses located in another country.

Duty Drawbacks

Duty drawbacks are refunds of customs duties paid on imported materials that are later exported, either in the same or a modified form, encouraging international trade.

Foreign Corrupt Practices Act

A United States federal law that aims to prevent the bribery of foreign officials for business purposes and ensure accounting transparency.

Bribery Charges

Legal accusations against individuals or entities for offering, giving, receiving, or soliciting something of value to influence actions or decisions of officials or representatives.