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Question 4 (3.33 points) Assume a Thailand firm will receive payments form Australian exports in 60 days. It expects that Australian dollar will appreciate, but
Question 4 (3.33 points) Assume a Thailand firm will receive payments form Australian exports in 60 days. It expects that Australian dollar will appreciate, but it still wants to hedge its risk. What type of hedging is more appropriate in this situation? Buy put options on Australian dollars. Buy forward contracts on Australian dollars. Sell forward contract on Australian dollars. Buy call options on Australian dollars. Question 5 (3.33 points) Which of the following is true? If you expect the Australian dollars to depreciate, it would be appropriate to buy futures contracts on Australian dollars for speculative purposes. A firm which buys a currency futures contract decides before the settlement date that it no longer wants to maintain its position, it should close out the position by selling an identical futures contract. The buyer of a currency put option is obligate to sell the underlying currency to the seller of the put option at the specified strike price/exercise price on the expiration date if the option can only be exercised on the expiration date. The writer (seller) of a currency call option is obligated to buy the underlying currency from the buyer of the call option at the specified strike price/exercise price if the call option is exercised by the buyer
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