Scenario: ABC Software ABC Software Is a Producer of Educational Software for Small

question 36

Multiple Choice

Scenario: ABC Software
ABC Software is a producer of educational software for small children. The company has operations in Switzerland and would like to expand its foreign production with a new facility in China.
-If ABC Software holds a currency option to purchase Swiss francs at SF1.67/$ in 30 days and at the end of the 30 days, the exchange rate is SF1.70/$, ABC Software ________.

• A) is required to follow through with a currency exchange
• B) would exercise its currency option
• C) has failed to hedge against exchange rate risk
• D) would not exercise its currency option

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Definitions:

Beer-Drinking Countries

Nations where consumption of beer is a significant part of the culture and may have high per capita beer consumption rates.

Distilled Beverages

Alcoholic drinks produced by distilling fermented grain, fruit, or vegetables, which include vodka, whiskey, rum, and gin.

Intoxication

A state resulting from the ingestion of substances (like alcohol or drugs) that impair mental or physical capabilities.

Binge Drinkers

Individuals who consume large amounts of alcohol in a short period of time, typically defined as five or more drinks for men and four or more drinks for women in about two hours.