Scenario - S & I Creations
Sven and Ingrid Allgertson developed the idea for their thriving business while awaiting the birth of their first child,Olga.Finding nowhere to purchase fine handmade baby clothing and other items,the couple decided to start their own business.Neither Sven nor Ingrid imagined just how successful this endeavor would turn out to be for them.Their designer baby clothes and products were an instant hit in the world marketplace.And even though the baby items are quite expensive to purchase,shoppers from around the world are only too happy to spend large sums of money on their beloved children.
Originally S & I Creations only sold products within Sweden,but soon global demand necessitated the company offer its products in several other foreign markets.Now the proud parents of baby Olga are also the proud owners of a $10 billion per year business.Sven and Ingrid cannot wait to see what the future holds for their family and their business operations.
-Many investors seeking assistance from the Whoppler Firm wish to use the forward market to lock in future exchange rates and ensure against uncertain future currency movements Which of the following best identifies what these investors are seeking?

Question

Quizplus · Accepted Answer

The investors are seeking a hedge, which is a financial instrument used to protect against uncertain future events, such as currency movements. In this case, they are using the forward market to lock in future exchange rates and protect against potential currency fluctuations.