Suppose That the Spot Rate and the 90-Day Forward Rate

question 13

Multiple Choice

Suppose that the spot rate and the 90-day forward rate on the pound sterling are $1.35 and $1.30,respectively.Your company,wishing to avoid foreign exchange risk,sells £500,000 forward 90 days.Assuming that the spot rate remains the same 90 days hence,your company would

• A)receive £500,000 90 days hence
• B)receive more than £500,000 in 90 days
• C)have been better off not to have sold pounds forward
• D)receive nothing

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Definitions:

Letterhead

Formal business stationery, with the doctor’s (or office’s) name and address printed at the top, used for correspondence with patients, colleagues, and vendors.

Business Stationery

Printed materials such as letterhead, envelopes, and business cards used in official correspondence and transactions by an organization.

Business Letters

Formal letters used for professional correspondence between companies, clients, and other entities.

One-inch Margins

One-inch margins refer to the standard formatting guideline for documents where all edges of the document are set to be one inch away from the paper's borders.