When hedging foreign currency exchange rate risk

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Reference no: EM131949070

1. Options contracts have what advantage compared to futures contracts when hedging foreign currency exchange rate risk?

a. Options can be bought at prices that are below what they should be

b. There is no cost when hedging with options

c. They result in gains no matter which direction exchange rates move

d. They allow for the buyer to “walk away” if the option contract suffers losses

e. They have an infinite life

2. Find the present value of $7,000 to be received one year from now, assuming a 3 percent annual discount interest rate. Also calculate the present value if the $7,000 is received after two years.

Reference no: EM131949070

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