The UK company has to make payment to Omani Company in OMR after 60 days for the purchase of crude oil. Since the company is exposed to the risk of currency fluctuations, the UK company purchased a forward contract. On maturity date the current exchange rate of OMR higher than the forward contract rate. What is the status of the UK company on maturity date? a. UK company gaining from currency forward contract b. UK company losing from currency forward contract c. Omani company gaining from currency forward contract d. None of the options
The UK company has to make payment to Omani Company in OMR after 60 days for the purchase of crude oil. Since the company is exposed to the risk of currency fluctuations, the UK company purchased a forward contract. On maturity date the current exchange rate of OMR higher than the forward contract rate. What is the status of the UK company on maturity date? a. UK company gaining from currency forward contract b. UK company losing from currency forward contract c. Omani company gaining from currency forward contract d. None of the options
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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2-The UK company has to make payment to Omani Company in OMR after 60 days for the purchase of crude oil. Since the company is exposed to the risk of currency fluctuations, the UK company purchased a forward contract. On maturity date the current exchange rate of OMR higher than the forward contract rate. What is the status of the UK company on maturity date?
a. UK company gaining from currency forward contract
b. UK company losing from currency forward contract
c. Omani company gaining from currency forward contract
d. None of the options
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