Currency swap without the exchange of notional amount

Assignment Help Financial Management

Reference no: EM131997897

1. Assume a U.S. firm has euro receivables for its German exports in 60 days. The firm expects the euro to appreciate, but it still wants to hedge its downside risk. What type of hedging is more appropriate in this situation?

A. Purchase euro forward

B. Purchase euro futures

C. Purchase euro put option

D. Purchase euro call option

2. If hedging eliminates risk but results in lower cash flow than not hedging, whether a firm hedges or not depends on:

A. the anticipated changes in the exchange rate.

B. the firm's ability to increase cash flow from other sources.

C. the firm's risk-aversion and the firm's reason for considering hedging.

D. the anticipated changes in the forward rate.

3. Interest rate swaps can be used for all of the following purposes except:

A. to borrow at the prime rate

B. to convert a fixed-rate loan into a floating-rate loan

C. to convert a floating-rate loan into a fixed-rate loan

D. to hedge interest rate risk

4. A currency swap without the exchange of notional amount is most likely to be used in what situation?

A. a company issuing a bond

B. a company arranging a loan

C. a dealer trying to hedge a currency option

D. a company generating cash flows in a foreign currency

Reference no: EM131997897

Questions Cloud

Investors are willing to pay for share of company stock : What is the P/E ratio that investors are willing to pay for a share of Company Z's stock?

What is the fair price for a share of powell? motors : Analysts forecast net income to be ?$257.2 million in the next fiscal year. What is the fair price for a share of Powell? Motors?

Calculate your finance charges and your new balance : You made a payment of $400, then bought $500 worth of clothes charged to your visa. Calculate your finance charges and your new balance.

Defined benefit pension plan for the company founder : In 2016 RD had consulted with an actuary to consider the creation of a defined benefit pension plan for the company's founder.

Currency swap without the exchange of notional amount : A currency swap without the exchange of notional amount is most likely to be used in what situation?

Ratings on both government bonds and corporate bonds : Rating agencies provide ratings on both government bonds and corporate bonds. How might these bonds be evaluated differently?

What is the rate of return-what is the annual growth rate : PartyAnimal pays a constant annual dividend of $3.50 a share and currently sells for $54 a share. What is the rate of return?

Require effective annual interest rate : You are considering 30-year, $1,000 par value bond. Its coupon rate is 9%. If you require effective annual interest rate of 8.62%,

What will annual loan payment : Dinero Bank offers you a $51,000, six-year term loan an annual interest rate of 8 percent. What will your annual loan payment be?

User Account

All Pages