Assume You Are an American Exporter and Expect to Receive

question 120

Multiple Choice

Assume you are an American exporter and expect to receive 50 pounds sterling at the end of 60 days.You can remove the risk of loss due to a devaluation of the pound sterling by:

• A) Selling sterling in the forward market for 60-day delivery
• B) Buying sterling now and selling it at the end of 60 days
• C) Selling the dollar equivalent in the forward market for 60-day delivery
• D) Keeping the sterling in Britain after it is delivered to you

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Definitions:

Financial Statement

A written report which quantitatively describes the financial health of a company.

Commercial Paper

An unsecured, short-term debt instrument issued by a company, typically for the financing of accounts receivable, inventories and meeting short-term liabilities.

Short-term Notes

Debt obligations that are due for repayment within a short period, typically less than one year.

High-quality Financial Statements

Financial statements that are accurate, complete, and able to be verified, giving a true and fair view of the financial performance and position of a company.