The Following Is an Example of Radio Shack Hedging Its

question 34

Multiple Choice

The following is an example of Radio Shack hedging its foreign currency risk:

• A) needing to pay 9,000 yen per radio to its suppliers in a month, Radio Shack makes a forward-exchange deal to buy yen.
• B) needing to pay 9,000 yen per radio to its suppliers in a month, Radio Shack makes a forward-exchange deal to sell yen.
• C) needing to pay 9,000 yen per radio to its suppliers in a month, Radio Shack buys yen at a spot-exchange 1 month from now.
• D) needing to pay 9,000 yen per radio to its suppliers in a month, Radio Shack sells yen at a spot-exchange 1 month from now.
• E) needing to pay 9,000 yen per radio to its suppliers in a month, Radio Shack sells yen in a forward-exchange deal.

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Definitions:

Foreign Policy

A government's strategy in managing its relations and interactions with other nations.

Vietnam Syndrome

A public aversion to American military engagement overseas due to the psychological trauma and political fallout from the Vietnam War.

Private Influence

Refers to the unseen or indirect control, impact, or guidance exerted by individuals or organizations in private sectors over public decisions, policy-making, or opinion.

American Foreign Policy

The strategies and decisions employed by the United States in its interactions with other nations, including diplomacy, military actions, and treaties, to achieve national objectives.