ABC Ltd., an Australian company, is expecting to export an equipment to China in December. The transaction will be settled in Chinese Yuan (CNY). Which of the following futures position between Chinese Yuan and Australian Dollar is appropriate for ABC Ltd. to hedge the foreign exchange risk? The company should short futures on the Chinese Yuan, O More than one of the other strategies is appropriate. O The company should long futures on the Australian Dollar. None of the other strategies is appropriate. O The company should long futures on the Chinese Yuan.
ABC Ltd., an Australian company, is expecting to export an equipment to China in December. The transaction will be settled in Chinese Yuan (CNY). Which of the following futures position between Chinese Yuan and Australian Dollar is appropriate for ABC Ltd. to hedge the foreign exchange risk? The company should short futures on the Chinese Yuan, O More than one of the other strategies is appropriate. O The company should long futures on the Australian Dollar. None of the other strategies is appropriate. O The company should long futures on the Chinese Yuan.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![ABC Ltd., an Australian company, is expecting to export an equipment to China in December. The transaction will be settled in
Chinese Yuan (CNY). Which of the following futures position between Chinese Yuan and Australian Dollar is appropriate for
ABC Ltd. to hedge the foreign exchange risk?
The company should short futures on the Chinese Yuan,
O More than one of the other strategies is appropriate.
The company should long futures on the Australian Dollar.
None of the other strategies is appropriate.
O The company should long futures on the Chinese Yuan.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4c83c866-5b58-4f8c-be47-02a01cda76d6%2F875c299b-f52c-4275-9126-b227e28295a6%2Feh2gimq_processed.jpeg&w=3840&q=75)
Transcribed Image Text:ABC Ltd., an Australian company, is expecting to export an equipment to China in December. The transaction will be settled in
Chinese Yuan (CNY). Which of the following futures position between Chinese Yuan and Australian Dollar is appropriate for
ABC Ltd. to hedge the foreign exchange risk?
The company should short futures on the Chinese Yuan,
O More than one of the other strategies is appropriate.
The company should long futures on the Australian Dollar.
None of the other strategies is appropriate.
O The company should long futures on the Chinese Yuan.
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