Question
We have learned how a U.S. importer/exporter that trades with a foreign company will often have to pay/receive foreign currencies, and the different ways it
We have learned how a U.S. importer/exporter that trades with a foreign company will often have to pay/receive foreign currencies, and the different ways it can hedge itself against undesirable volatility of exchange rates with forward contracts. If you have a choice, at which point will you enter into such forward contracts for hedging purposes? i.e. would be prefer hedging against expected cashflow (before you even sign a contract with any foreign company), against firm commitment (after you have signed the contract, but before delivery of goods) or against an account payable or account receivable (after delivery of goods)? Why? (THIS NEEDS TO BE IN 500 WORDS OR MORE).
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