Question
Assume you are a Canadian exporter who will receive 500,000 euros at the end of 60 days. If you do not hedge this transaction, you
Assume you are a Canadian exporter who will receive 500,000 euros at the end of 60 days. If you do not hedge this transaction, you face exchange-rate risk. The best way to remove the risk of loss due to currency fluctuations is to: a. buy 500,000 euros in the forward exchange market for delivery in 60 days. b. buy 500,000 euros now, hold them for 60 days, and then sell them at the spot exchange rate that exists 60 days from now. c. sell 500,000 euros in the forward exchange market for delivery in 60 days. d. sell 500,000 euros now in the spot market.
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