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If a Firm Based in the Netherlands Wishes to Avoid

Question 11

Multiple Choice

If a firm based in the Netherlands wishes to avoid the risk of exchange rate movements, and is due to receive USD100,000 in 90 days, it could:


A) sell US dollars 90 days from now at the spot rate.
B) enter into a 90-day forward sale of US dollars for euros;
C) purchase US dollars 90 days from now at the spot rate;
D) enter into a 90-day forward purchase of US dollars for euros;

Correct Answer:

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