How can rodgers hedge its foreign currency risk

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Reference no: EM131524892

Can someone double check this answer? It is NOT "b" according to my practice test.

Rodgers Inc. is imports paper from Shanghai China. In a typical transaction Rodgers receives a delivery of paper from the Chinese Company and pays the company in Yuan. In all transactions, the amounts and payments are set today, but all deliveries, payments, and revenues come 90 days later. How can Rodgers hedge its foreign currency risk?

a. Contract to buy dollars in the futures market today at an agreed upon price in 90 days.

b. Contract to sell Yuan in the futures market today at an agreed upon price in 90 days.

c. Contract to buy Yuan in the futures market today at an agreed upon price in 90 days.

d. Contract to buy call options on dollars today with expiration in 90 days.

e. Contract to buy put options on Yuan today with expiration in 90 days.

Someone answered this previously posted question with the answer being "B" but that is not the correct answer according to my practice test.

Reference no: EM131524892


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