A French corporation imports goods from the United State and expects to pay in U.S. dollars in six months. To hedge against potential exchange rate fluctuations, the corporatio can enter into a forward contract. What is the primary benefit of using a forward contract in this situation?

A French corporation imports goods from the United State and expects to pay in U.S. dollars in six months. To hedge against potential exchange rate fluctuations, the corporatio can enter into a forward contract. What is the primary benefit of using a forward contract in this situation?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter6: Managing In The Global Economy

Section: Chapter Questions

Problem 6E

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A French corporation imports goods from the United State and expects to
pay in U.S. dollars in six months. To hedge against potential exchange rate
fluctuations, the corporatio can enter into a forward contract. What is the
primary benefit of using a forward contract in this situation?

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