You Are Bidding on a Contract in a Foreign Currency

question 21

Multiple Choice

You are bidding on a contract in a foreign currency and you are not sure if you will win the bid.However,the analysis in your bid will be flawed if the foreign currency exchange rate changes between now and when you know whether you have won the contract.The best course of action to hedge your position is

• A) long a currency futures contract.
• B) short a currency futures contract.
• C) purchase an option to sell foreign currency for your currency.
• D) sell an option to sell foreign currency for your currency.

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Definitions:

Stable Environments

Conditions in which the external business context remains relatively unchanged, allowing for predictable operational planning.

Functional Structures

An organizational design that groups employees according to their specialized roles or functions within the company, aiming for efficiency and expertise.

Functional Structures

An organizational design where the company is divided into departments based on specialty functions such as marketing, finance, and production.

Career Path

Refers to the progression or sequence of jobs and roles that an individual undertakes throughout their working life.