An MNC frequently uses either forward or futures contracts to hedge its exposure to foreign payables. To do so, the MNC can either sell the foreign currency forward or sell futures.

Question

Quizplus · Accepted Answer

To hedge foreign payables, the MNC should buy the foreign currency forward or buy futures, not sell them. Selling would be used to hedge foreign receivables.

An MNC Frequently Uses Either Forward or Futures Contracts to Hedge