VM Industries imports numerous parts from India for assembly in the USA. What category of futures contract will likely be used to hedge this transaction?
A) Foreign currency
B) Metals and energy
C) Interest rates
D) Equity indexes

Question

Quizplus · Accepted Answer

Foreign currency futures contracts would be used to hedge against the risk of currency value fluctuations between the US dollar and the Indian rupee, which can affect the cost of importing parts from India.

VM Industries Imports Numerous Parts from India for Assembly in the USA