Scenario: ABC Software
ABC Software is a producer of educational software for children below the age of twelve. The company has operations in Switzerland and would like to expand its foreign operations with a new facility in China.
-If ABC Software simultaneously purchases and sells foreign exchange for two different dates,the company is said to be involved in ________.

Question

Quizplus · Accepted Answer

When ABC Software purchases and sells foreign exchange for two different dates, it is conducting a currency swap. This allows the company to manage its foreign exchange risk by exchanging one currency for another at a predetermined rate on one date, and then reversing the transaction on a later date using a different exchange rate. It is a common risk management tool used by companies operating in multiple countries. Choices A, C, and D are not applicable in this scenario.

Scenario: ABC Software ABC Software Is a Producer of Educational Software for Children