If you have a foreign currency denominated accounts payable


1. Boeing just signed a contract to sell 100 airplanes to China Airlines over the next 20 years, and the payment of CNY 100 million is due December 31 of each year. Boeing can best hedge the foreign currency risk by using which product?

a) Options

b) Swaps

c) Futures

d) All of the above

2. If you have a foreign currency denominated accounts payable, you can hedge with:

a) A long position in a currency forward contract

b) A short position in a currency forward contract

c) Buying the foreign currency today and investing it in the foreign country.

d) Both a) and c)

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Financial Management: If you have a foreign currency denominated accounts payable
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