23-106 If the Exchange Rate in One Month Is $1

question 72

Multiple Choice

23-106 If the exchange rate in one month is $1.55/£1,what action should the FI take in regards to the hedge?

• A)Call the £100 million proceeds of the T-bill from the option writer for $160 million
• B)Put the £100 million proceeds from the T-bill to the option writer for $160 million.
• C)Put the £100 million proceeds from the T-bill to the option writer for $155 million.
• D)Call the £100 million proceeds of the T-bill from the option writer for $155 million
• E)Allow the option contracts to expire since they are out of the money.

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Definitions:

Strategic Plans

Long-term, forward-looking approaches with overarching goals and objectives that guide the direction of an organization.

Grand Strategy

A comprehensive, long-term plan that outlines an organization's or nation's overarching goals and the means to achieve them.

Cross-Functional Teams

Groups composed of members from different departmental or functional backgrounds working together towards a common goal.

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The series of steps or actions taken to manufacture a product or deliver a service, from initial inputs to the final output.