Which of the following does not represent the risk from using forward contracts?
A) A forward contract is used to hedge receivables, and the spot exchange rate at the expiration of the contract exceeds the contract price.
B) A forward contract is used to hedge receivables, and the spot exchange rate at the time of expiration of the contract is lower than the contract price.
C) A forward contract is used to hedge payables, and the spot exchange rate at the time of expiration of the contract is lower than the contract price.
D) A forward contract is used to hedge payables or receivables, and the amount to be received or paid is canceled.
Correct Answer:
Verified
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