1. An exporter faced with exposure to an appreciating currency can reduce transaction exposure with a strategy of

Select one:

A. Paying or collecting early

B. Paying or collecting late

C. Paying late, collecting early

D. Paying early, collecting late

2. Contingent exposure can best be hedged with

Select one:

A. Options

B. Money market hedging

C. Futures

D. All of the above

3. A Japanese importer with USD payable due in one year can hedge his exchange rate risk as:

Select one:

A. Long USD forward contracts

B. Borrow YEN to save in USD

C. Long calls on USD

D. all of the above

E. Statement A and C.

4. Option hedging is not as good as other hedging strategies because you have to pay for options even if you may not exercise them in the future.

Select one:

True

False

5. The choice between forward hedge and money market hedge is determined by which hedge provides better outcome at the future spot rate when payment is made/received.

Select one:

True

False