Your Firm, Which Operates in the United States, Has a Contractual

question 97

Multiple Choice

Your firm, which operates in the United States, has a contractual payment of $\le$ 1 million due in three months.Which of the following methods would be considered speculative regarding your exchange-rate risk?

• A)Buy 1 million pounds now at the current spot rate
• B)Buy 1 million pounds in three months at the current spot rate
• C)Contract forward to buy 1 million pounds in three months
• D)Borrow Dollars, convert to pounds at spot, invest for three months

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