A firm enters into an agreement to ________ British pounds and ________ U.S. dollars. If the dollar appreciates vs. the pound the firm will realize an accounting profit on the swap transaction.
A)pay; receive
B)receive; pay
C)pay; pay
D)receive; receive

Question

Quizplus · Accepted Answer

If the firm agrees to pay British pounds and receive U.S. dollars, and the dollar appreciates against the pound, the firm will receive more valuable dollars compared to the pounds it pays, resulting in an accounting profit.

A Firm Enters into an Agreement to ________ British Pounds