Which of the Following Is the Most Likely Strategy for a U.S

question 123

Multiple Choice

Which of the following is the most likely strategy for a U.S. firm that will be receiving Swiss francs in the future and desires to avoid exchange rate risk (assume the firm has no offsetting position in francs) ?

• A) purchase a call option on francs.
• B) sell a futures contract on francs.
• C) obtain a forward contract to purchase francs forward.
• D) all of the above are appropriate strategies for the scenario described.

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Definitions:

Vertical Merger

A combination of two or more companies at different stages of production in the same industry.

Conglomerate Company

A large corporation that owns a diversified group of other companies across various industries, with no single business dominating its portfolio.

Minority-Owned

Refers to a business that is at least 51% owned, controlled, and operated by individuals from a recognized minority group.

Small Businesses

Independent enterprises with limited size and revenue, characterized by fewer employees and lesser market share compared to larger companies.