Alternatives available to cover the expected receipt

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Reference no: EM131325112

A UK-based multinational company has sold an overseas chemical plant, the price for the plant being determined by an earn-out agreement. The amount of the receipt under the agreement is likely to be $10m, with a maximum of $12m. The receipt is expected in eleven months' time; the exact amount will be known in eight months' time. A policy decision has been taken that the expected receipt should be fully covered.

(a) What are the alternatives available to cover the expected receipt?

(b) What factors could influence your choice between these alternatives? (Association of Corporate Treasurers: Part II, September 1989, Paper in Currency Management).

Reference no: EM131325112

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