Encana Inc,a Canadian firm has a US dollar receivable which it hedges using a forward market contract.The Canadian dollar is quoted directly.Which of the following statements is true?
A) If the spot rate is greater than the forward rate at maturity, Encana is better off with the hedge than without the hedge.
B) If the spot rate is less than the forward rate at maturity, Encana is better off with the hedge than without the hedge.
C) If the spot rate is equal to the forward rate at maturity, Encana is better off with the hedge than without the hedge.
D) Need more information
Correct Answer:
Verified
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