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International Financial Management

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter5: Currency Derivatives

Section: Chapter Questions

Problem 16QA

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Assume a U.S. company purchases 6,000 Euro worth of goods from an Italian company, on account, and will settle the balance in Euros on December 1, 2021.
Which of the following derivatives can be used to hedge foreign exchange risk?
A foreign currency put option to sell Euros that will settle on December 1, 2021.
A foreign currency call option to buy Euros that will settle on December 1, 2021.
A forward contract to sell Euros on December 1, 2021.
None of the options.

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