XYZ Corporation,located in the United States,has an Accounts Payable Obligation

question 13

Multiple Choice

XYZ Corporation,located in the United States,has an accounts payable obligation of ¥750 million payable in one year to a bank in Tokyo.Which of the following is not part of a money market hedge?

• A)Buy the ¥750 million at the forward exchange rate.
• B)Find the present value of ¥750 million at the Japanese interest rate.
• C)Buy that much yen at the spot exchange rate.
• D)Invest in risk-free Japanese securities with the same maturity as the accounts payable obligation.

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Definitions:

Afferent

Pertaining to nerve fibers that carry sensory information towards the central nervous system.

Indifferent

Showing no particular interest or sympathy; apathetic or uninvolved emotionally.

Somatic Nervous System

A component of the peripheral nervous system that controls voluntary movements of the body through its control of skeletal muscles.

Sympathetic Nervous System

Part of the autonomic nervous system that prepares the body for physical and mental activity by accelerating heart rate, constricting blood vessels, and raising blood pressure.