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nirvana33 [79]
3 years ago
5

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.
Business
1 answer:
Sveta_85 [38]3 years ago
4 0

Answer:

The answer is C.

Explanation:

The US firm is using derivatives to hedge against the risk of Swiss francs falling.

A futures contract is the type of contract that two parties (one the buyer and the other the seller) the buyer will purchase an underlying asset(Swiss francs) from the seller at a later date in the future and at a price agreed by both parties. Futures is a standardized derivatives and it is traded in exchange.

To sell a futures contract or forward contract means the seller is anticipating fall or drop in value or price of the underlying asset (Swiss francs) and we say the seller is holding a short position.

While to buy a futures contract or forward contract means the buyer is anticipating an increase or rise in value or price of the underlying asset (Swiss francs) and we say the seller is holding a long position.

So since the US firm is anticipating a fall in value of Swiss francs, he will sell a futures contract on the Swiss francs

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Answer:

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As the owner of La Boulangerie Bakery in Baton Rouge, Louisiana, you have a devoted clientele savoring your delicacies. Your sal
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Answer:

La Boulangerie Bakery,

Baton Rouge,

Louisiana, U.S.A

25th April, 2021

Dear esteemed customers,

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I do hope you would understand our challenges as a company and bear with us regarding to this delivery charge introduction.

Sincerely,

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Explanation:

3 0
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Under such a scenario,<em> cartels are unlikely to be formed to generate more competition among the companies that compose them.</em>

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