Your Firm Will Be Importing a Large Order of Its

question 65

Multiple Choice

Your firm will be importing a large order of its inputs from the United States in six months and is concerned that the Canadian dollar might fall against the U.S.dollar over that time.To hedge your risk,you decide to enter into a currency forward contract to purchase 500,000 USD at a rate of 1.0232 CAD/USD.If the spot exchange rate in six months' time ends up being 0.9967 CAD/USD,what is your gain or loss from hedging compared to remaining unhedged?

• A)$0
• B)$12,992
• C)$13,250
• D)-$13,250
• E)-$12,992

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Definitions:

Proportional Representation

An electoral system in which parties gain seats in proportion to the number of votes cast for them, as opposed to winning only by the majority in a district.

Simple Plurality

A voting system where the candidate with the most votes wins, regardless of whether they have a majority.

Straight-Ticket Voting

Straight-ticket voting is the practice of voting for all the candidates of the same political party on a ballot.

Independents

Voters or political candidates who do not affiliate with any established political party.