Assume you are an American exporter and expect to receive 50 pounds sterling at the end of 60 days.You can remove the risk of loss due to a devaluation of the pound sterling by

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Selling the pound sterling in the forward market for 60-day delivery allows the American exporter to lock in the current exchange rate and eliminate the risk of loss due to a devaluation of the pound sterling. By selling pounds in the forward market, the exporter can guarantee the amount of dollars they will receive in 60 days, regardless of any changes in the exchange rate during that time. Option B would leave the exporter vulnerable to fluctuations in the exchange rate, while option C does not eliminate the risk associated with receiving pounds that may depreciate in value. Option D is not a viable solution as the exporter needs to convert the pounds into dollars to receive payment.

Assume You Are an American Exporter and Expect to Receive