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

question 147

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:

Creeping Bureaucracy

The gradual increase in bureaucratic layers within an organization, often leading to decreased efficiency and increased complexity.

TQM

Total Quality Management; a management approach focused on improving the quality of an organization's outputs, including goods and services, through continual feedback and refinement.

Incentive Pay Systems

Compensation methods designed to motivate employees by tying a portion of their earnings to specific performance metrics.

TQM

Total Quality Management; a business management strategy aimed at embedding awareness of quality in all organizational processes.