Your firm, which operates in the United States, has a contractual payment of £1 million due in 3 months. Which one of the following methods would be considered speculative regarding your exchange rate risk?
A) Buy 1 million pounds now at the current spot rate.
B) Buy 1 million pounds in 3 months at the current spot rate.
C) Contract forward today to buy 1 million pounds in 3 months.
D) Sell £1 million of goods in the United Kingdom now with payment due in 3 months.
Correct Answer:
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