If a Firm Planning to Hedge Receivables Is Certain of the Future

question 38

Multiple Choice

If a firm planning to hedge receivables is certain of the future direction a spot rate will move, and requires a tailor-made hedge in terms of amount and maturity date, it should use a

• A)call options contract.
• B)futures contract.
• C)forward contract.
• D)put options contract.

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Definitions:

Responsibility

The duty to deal with something or to take care of something or someone.

Liability

Legal responsibility or obligation, often referring to the state of being responsible for something, especially in financial or legal contexts.

Scope of Practice

Principles of self-boundaries of the profession.

Human Resources Department

The division of a business or organization that manages employee-related functions, including recruitment, training, compliance, and benefits administration.