Some firms use "leads" or "lags" to re-time the transfer of funds in international transactions. To benefit from changing exchange rates, firms holding a ________ currency will ________ their payments before the currency drops in value.

Question

Quizplus · Accepted Answer

The use of leads means that the firm is making payments earlier than necessary, which can benefit from a weakening currency. Soft currency refers to a currency that is expected to weaken, so firms holding a soft currency will lead their payments to take advantage of the weakening currency. Therefore, option C is the best choice.

Some Firms Use "Leads" or "Lags" to Re-Time the Transfer