Scenario: ABC Software
ABC Software is a producer of educational software for small children.The company has operations in Switzerland and would like to expand its foreign production with a new facility in China.
-If ABC Software simultaneously purchases and sells foreign exchange for two different dates,it is doing which of the following?

Question

Quizplus · Accepted Answer

If ABC Software simultaneously purchases and sells foreign exchange for two different dates, it is conducting a currency swap. A currency swap involves exchanging principal and interest payments in one currency for the same in another currency. This allows the company to manage its currency exposure by locking in exchange rates for future transactions. It does not necessarily increase foreign exchange rate risk, enter an arbitrage situation, or involve only buying and selling at the spot rate.

Scenario: ABC Software ABC Software Is a Producer of Educational Software for Small