Amazing Corporation, a U.S. enterprise, sold product to a customer in Wales on October 1, 20x1 for £100,000 with payment required on April 1, 20x2. Relevant exchange rates are:
The discount factor corresponding to the company's incremental borrowing rate for 6 months is 0.95.
What term is used to describe the circumstances under which Amazing Corporation is entering the forward contract?
A) Hedge of an unrecognized foreign currency firm commitment
B) Hedge of a recognized foreign-currency-denominated asset
C) Hedge of a forecast foreign-currency-denominated transaction
D) Hedge of net investment in foreign operations
Correct Answer:
Verified
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