An MNC frequently uses either forward or futures contracts to hedge its exposure to foreign payables. To do so, the MNC can either sell the foreign currency forward or sell futures.

Question

Quizplus · Accepted Answer

An MNC hedging its exposure to foreign payables would buy forward or futures contracts in the foreign currency, not sell them, to lock in the cost of the payable.

An MNC Frequently Uses Either Forward or Futures Contracts to Hedge