79.Your firm is bidding on a large construction contract in a foreign country. This contingent exposure could best be hedged
80.On a recent sale, Boeing allowed British Airways to pay either $18 million or £10 million. A. At the due date, British airways will be indifferent between paying dollars or pounds since they would of course have hedged their exposure either way.B.Boeing has provided British Airways with a free option to buy $18 million with an exercise price of £10 million.C.Boeing has provided British Airways with a free option to sell up to £10 million with an exercise price of $18 million.D. All of the above
81.Contingent exposure can best be hedged with
82.A 5-year swap contract can be viewed as a portfolio of 5 forward contracts with maturities of 1, 2, 3, 4 and 5 years. One important exception is that
83.To find the swap rate for a 3-year swap, you would
84.Generally speaking, a firm with recurrentexposure can best hedge using which product? A. OptionsB. SwapsC. Futures.D. All of the above
85.The current exchange rate is €1.25 = £1.00 and a British firm offers a French customer the choice of paying a £10,000 bill due in 90 days with either £10,000 or €12,500.