In the context of managing exchange rate risks, when companies take advantage of spot exchange rates, they:
A) buy foreign currency at present-day rates in anticipation of future transactions.
B) make an agreement with a bank to exchange currency at some future date.
C) simultaneously purchase and sell a given amount of currency at two different rates.
D) abandon their own country's currency to adopt the most stable currency in the international market.

Question

Quizplus · Accepted Answer

Buying foreign currency at present-day rates for future transactions is a direct application of using spot exchange rates to manage exchange rate risks. This allows companies to lock in costs and avoid the risk of currency value fluctuations.

In the Context of Managing Exchange Rate Risks, When Companies