Firms Use Forward Foreign Exchange Contracts Rather Than a Cash-And-Carry

question 71

Multiple Choice

Firms use forward foreign exchange contracts rather than a cash-and-carry strategy because ________.

• A) of lower transaction costs
• B) of inability to borrow in different currencies
• C) of higher interest costs if credit quality is poor
• D) all of the above

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Definitions:

Lead Time

The amount of time that elapses between the initiation of a process and its completion. In supply chain management, it often refers to the time from placing an order to its delivery.

Ordering

The process of requesting and procuring goods or services from suppliers or vendors.

Received

The act of accepting or obtaining something that has been sent or given.

Two-Way Link

A reciprocal relationship or connection, where both parties can send and receive information or influence each other.