A hedging instrument that allows one to establish a fixed exchange rate for future transactions where delivery is required is a(n)________.
A) option
B) investment contract
C) future spot contract
D) forward contract

Question

Quizplus · Accepted Answer

A forward contract is a hedging instrument that allows one to establish a fixed exchange rate for future transactions where delivery is required. Options and investment contracts are financial instruments that can be used for hedging, but do not necessarily establish a fixed exchange rate. A future spot contract is not a commonly used term and does not accurately describe a hedging instrument.

A Hedging Instrument That Allows One to Establish a Fixed