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- Subject
- Foreign Exchangeeconomics-mcqs › foreign-exchange
- Published
- 1 Jun 2019
- Last updated
- 28 May 2026
If Boeing is scheduled to receive euros in six months and wishes to hedge its position, what action should the company take in the six-month forward market to guard against a decline in the euro's value?
Multiple choice question for Foreign Exchange. Select an option, then review the explanation below.
Explanation
Since Boeing will receive euros in the future, it faces the risk that the euro might depreciate before payment. To hedge against this potential loss, the firm should sell euros forward now, locking in the exchange rate and protecting itself from a decline in the euro's value.
More Foreign Exchange MCQs
Practice related questions from the same subject.
- 1.In a floating exchange rate system, what is the typical trend observed regarding currency values?
- 2.What term describes the increase in the value of one currency compared to another?
- 3.What is the typical impact of a fiscal expansion in the UK on the value of the pound sterling?
- 4.What do we call exchange rates that fluctuate based solely on market supply and demand without government intervention?
- 5.What type of exchange rate system was established by the agreements made at the 1944 Bretton Woods conference?