Assume that Boeing anticipates receiving 1 billion francs in three months from its exports of jetliners to Switzerland.To avoid the risk of an appreciation of the dollar against the franc, Boeing could contract to sell its expected franc receipts in the forward market at today's forward rate.

Question

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By contracting to sell its expected franc receipts in the forward market, Boeing can lock in the current exchange rate and avoid the risk of an appreciation of the dollar against the franc. This is a common risk management strategy used by companies engaged in international trade.

Assume That Boeing Anticipates Receiving 1 Billion Francs in Three