When company analyzes its short term financing needs

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Reference no: EM131879462

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

Reference no: EM131879462

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