If a Firm Is Due to Be Paid in Euros

question 87

Multiple Choice

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

• A) sell foreign exchange futures short
• B) buy foreign exchange futures long
• C) stay out of the exchange futures market
• D) buy foreign exchange forward contracts long

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Definitions:

Qualitative Model

A model that focuses on non-quantifiable aspects such as patterns, themes, or descriptions to understand phenomena or behaviors.

Long-Term Environmental Forecasts

Predictions about how the broader environment, including social, technological, economic, environmental, and political trends, will change over a lengthy period and affect an organization.

Delphi Technique

A method of group communication and forecasting in which participants complete questionnaires in multiple rounds to reach a consensus.

Nominal Group Technique

A structured method for group brainstorming that encourages contributions from everyone in the group and is used to generate a broad array of ideas or solutions.