ABC Company, a British company, expects to receive $10,000,000 in 30 days. It wants to hedge its foreign currency risk in the forward market. The forward price of the pound contract is 0.74 pounds/$. What foreign currency risk is ABC most likely trying to hedge by entering the forward market? A. The pound increasing in value over the next 30 days B. The dollar increasing in value over the next 30 days C. The pound increasing in value after 30 days.
ABC Company, a British company, expects to receive $10,000,000 in 30 days. It wants to hedge its foreign currency risk in the forward market. The forward price of the pound contract is 0.74 pounds/$. What foreign currency risk is ABC most likely trying to hedge by entering the forward market? A. The pound increasing in value over the next 30 days B. The dollar increasing in value over the next 30 days C. The pound increasing in value after 30 days.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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4.ABC Company, a British company, expects to receive $10,000,000 in 30 days. It wants to hedge its foreign currency risk in the forward market. The forward price of the pound contract is 0.74 pounds/$. What foreign currency risk is ABC most likely trying to hedge by entering the forward market?
A. The pound increasing in value over the next 30 days
B. The dollar increasing in value over the next 30 days
C. The pound increasing in value after 30 days.
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