Samson Corporation buys a foreign currency future contract as a hedging strategy to protect against possible losses from fluctuations in a particular foreign exchange.This strategy suggests that Samson Corporation has:

Question

Quizplus · Accepted Answer

Since Samson Corporation has foreign accounts payable, it is exposed to losses from a potential rise in the foreign exchange rate. By purchasing a foreign currency futures contract, Samson can lock in an exchange rate and protect against potential losses from a possible rise in the exchange rate.

Samson Corporation Buys a Foreign Currency Future Contract as a Hedging