Your firm,which operates in the United States,has a contractual payment of £1 million due in 3 months.Which 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 to buy 1 million pounds in 3 months.
D) Borrow dollars, convert to pounds at spot, and invest for 3 months.
Correct Answer:
Verified
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