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 holds a currency option to purchase Swiss francs at SF 1.67/$ in 30 days,at the end of which the exchange rate is SF1.70/$,then ABC Software ________.

Question

Quizplus · Accepted Answer

If the exchange rate is SF1.70/$ at the end of 30 days, then it would be more favorable for ABC Software to not exercise its currency option, as they can simply purchase the Swiss francat the current exchange rate of SF1.70/$ without incurring any additional costs. Therefore, Choice D would be the best choice.

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