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A South African firm has sold some heavy machinery to a European customer. It thinks that it is likely to receive Euros (EUR) in two
A South African firm has sold some heavy machinery to a European customer. It thinks that it is likely to receive Euros (EUR) in two months from now. How can the South African firm hedge this exposure? I. Enter into a forward contract to buy Euros in 2 months II. Enter into a forward contract to sell Euros in 2 months III. Buy a put option on the Euro that expires in 2 months. IV. Buy a call option on the Euro that expires in 2 months. V. Ask the customer to pay in South African Rand (ZAR)
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