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Question 1 2 pts A forward contract: Allows a firm to benefit from the appreciation of a currency but protects it from the currency's depreciation
Question 1 2 pts A forward contract: Allows a firm to benefit from the appreciation of a currency but protects it from the currency's depreciation Never expires, which makes them attractive to firms with repeated sales in a country Is an expensive hedging strategy compared to money market hedges Requires both parties to complete a transaction at a set date Question 2 2 pts A U.S. company will choose to hedge a foreign currency-based receivable due in three months because: It fears that the foreign currency will strengthen vs. the U.S. dollar It fears that the foreign currency will weaken vs. the U.S. dollar O O O It fears that there will be no change to the exchange rate to the U.S. dollar None of the above because companies should not hedge because it represents currency speculation
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