Which of the Following Does Not Represent the Risk from Using

question 92

Multiple Choice

Which of the following does not represent the risk from using forward contracts?

• A) if a forward contract is used to hedge receivables, and the spot exchange rate at the expiration of contract exceeds the contract price.
• B) if a forward contract is used to hedge receivables, and the spot exchange rate at the time of expiration of contract is lower than the contract price.
• C) if a forward contract is used to hedge payables, and the spot exchange rate at the time of expiration of contract is lower than the contract price.
• D) if a forward contract is used to hedge payables or receivables and the amount to be received or paid is cancelled.

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