Multiple Choice
A US FI wishes to hedge a €10 000 000 loan using euro currency futures.Each euro futures contract is for €125 000, and the hedge ratio is 1.40.The loan is payable in one year in euros.What type of currency hedge is necessary to protect the FI from exchange rate risk?
A) Buy euro currency futures.
B) Sell euro currency futures.
C) Finance the loan with Eurodollar deposits.
D) Either sell euro currency futures or finance the loan with Eurodollar deposits.
Correct Answer:
Verified
Correct Answer:
Verified
Q16: An FI that holds more foreign currency
Q17: Assume an Australian FI has US$100 000
Q18: On-balance-sheet hedging involves taking positions in forward
Q19: A net short position exposes an FI
Q20: Assume an Australian FI has US$100 000
Q22: Assume an FI sells A$100 million for
Q23: In a currency swap it is usual
Q24: Which of the following statements is true?<br>A)Conceptually,
Q25: Suppose an FI has the following
Q26: A US FI wishes to hedge a