Hedging with Currency Derivatives

Assume that the transactions listed in the first column of the table below are anticipated by U.S. firms that have no other foreign transactions. Place anXin the table wherever you see possible ways to hedge each of the transactions. Explain why.

FORWARD CONTRACT FUTURES CONTRACT OPTION S CONTRACT FORWARD FORWARD BUY PURCHASE SALE SELL FUTURES PURCHASE PURCHASE A CALL FUTURES A P UT a. Georgetown Co. plans to purchase Japanese goods denominated in yen. b. Harvard, Inc., will sell goods to Japan, denominated in yen. c. Yale Corp. has a subsidiary in Australia that will be remitting funds to the U.S. parent d. Brown, Inc., needs to pay off existing loans that are denominated in Canadian dollars. e. Princeton Co. may purchase a company in Ja pan in the near future (but the deal may not go through)