The Main Purpose in Contracting to Purchase Foreign Currency in the Forward

question 40

Multiple Choice

The main purpose in contracting to purchase foreign currency in the forward market is to:

• A) earn a premium (interest) on the exchange.
• B) lock into a price now.
• C) take advantage of future price reductions.
• D) avoid the more expensive spot rates.

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Definitions:

Distributor Storage

A logistic strategy where products are stored at distributor warehouses, allowing for quicker delivery to customers as compared to direct manufacturer shipments.

Product Variety

The range of different products or services offered by a company to meet diverse consumer needs.

Manufacturer Storage

A warehousing solution where the goods produced by a manufacturer are stored until they are shipped to the next link in the supply chain.

Direct Shipping

A distribution method where products are shipped directly from the supplier or manufacturer to the customer, bypassing intermediary storage or handling steps.