Business

27 November, 07:11

Even if the use of a forward contract for hedging prevents a loss (or gain) from exchange rate changes on the hedged item, which of the following may result in a cost to an entity that uses forward contracts for hedging purposes?

I. Fees imposed by the counterparty to the forward contract.

II. A difference between the spot rate and the forward rate when the forward exchange contract is executed.

a) I only.

b) II only.

c) Both I and II.

d) Neither I nor II.

+1

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