a forward market hedge, a company that is long a foreign currency will _______ the foreign currency forward, whereas a company that is short a foreign currency will _______ the currency forward.
A) buy; sell
B) sell; buy
C) borrow; sell
D) lend; buy

Question

Quizplus · Accepted Answer

A company that is long a foreign currency will sell the foreign currency forward to hedge against a potential decrease in its value, while a company that is short a foreign currency will buy the currency forward to hedge against a potential increase in its value.

A Forward Market Hedge, a Company That Is Long a Foreign