Currency futures can be used by MNCs to hedge payables. That is, an MNC would ____ futures to hedge a foreign payable position. Also, currency futures can be used for speculation. For example, a speculator expecting a currency to appreciate would ____ futures.
A) buy; buy
B) sell; sell
C) buy; sell
D) sell; buy

Question

Quizplus · Accepted Answer

To hedge a foreign payable position, an MNC would buy currency futures contracts. Buying futures contracts means that the MNC is essentially locking in the exchange rate to protect against any unfavorable movements in the future. 
On the other hand, if a speculator expects a currency to appreciate, they would also buy futures contracts to profit from the expected price increase.

Currency Futures Can Be Used by MNCs to Hedge Payables