1. You own a machine tool company in Houston. You just signed a contract to sell $300,000 worth of machine tools to a U.K. company who agrees to pay in £ in 90 days. What should you do in order to hedge any currency risk for this order? Assume the spot rate is S($1.25/£) and the 90 day forward rate is F($1.20/£).
A. Sell $300,000 forward for F($1.20/£) $
B. Sell £240,000 forward at F($1.20/£)
C. Sell £250,000 forward at F($1.20/£)
D. Buy £250,000 forward at F($1.20/£)
2. When a company analyzes its short term financing needs, its typically examines cash flow at:
A. monthly intervals
B. yearly intervals
C. quarterly intervals
D. weekly intervals