Firm desires to avoid risk from exchange rate fluctuatios

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Reference no: EM131077950

1. If a U.S. firm desires to avoid the risk from exchange rate fluctuations and it will need C$200,000 in 90 days to make payment on imports from Canada, it could 

A) obtain a 90-day forward purchase contract on Canadian dollars.

B) obtain a 90-day forward sale contract on Canadian dollars.

C) purchase Canadian dollars 90 days from now at the spot rate.

D) sell Canadian dollars 90 days from now at the spot rate.

2. Assume that Swiss investors are benefiting from CIA due to a high U.S. interest rate. Which force results from the act of this CIA?

A) Upward pressure on the Swiss franc's spot rate

B) Upward pressure on the U.S. interest rate

C) Downward pressure on the Swiss interest rate

D) Upward pressure on the Swiss franc's forward rate

Reference no: EM131077950

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