A UK company has just provided a service to a US company for $750,000.

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answerhappygod
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A UK company has just provided a service to a US company for $750,000.

Post by answerhappygod »

Settlement is due in two months time and the UK company wants to hedge the risk of a fall in the value of the US dollar over the next two months. The following methods of hedging this risk have been suggested:
1.Buy sterling put options now
2.Buy sterling futures now
3.Buy sterling call options now
4.Sell sterling futures now
Which two of the above suggestions would provide a hedge against the exchange rate risk?
A. 1 and 3
B. 1 and 4
C. 2 and 3
D. 2 and 4
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