Ask Question
BusinessBusiness
24 January, 22:36

A company headquartered in Vancouver, British Columbia, is building a pipeline in Russia. The invoice amount is due in 90 days and is denominated at 28 million rubles. The Canadian dollar is trading for 28 rubles currently and 29 rubles 90 days forward.

Which of the following strategies will the Canadian firm most likely pursue in the 90-day forward market to hedge the transaction exposure inherent in this situation?

A. Purchase 28,000,000 rubles.

B. Purchase 29,000,000 rubles.

C. Sell 28,000,000 rubles.

D. Sell 29,000,000 rubles.

+5
Answers (1)
  1. 24 January, 22:46
    0
    C. Sell 28,000,000 rubles

    Explanation:

    By doing so, the company will immediately receive the amount equivalent in Canadian Dollars by selling 28 million rubles in forward and after 90 days when the invoice amount (28 million rubbles) is received from building the pipeline, will be used to netting of the forward contract.

    In this way, company can hedge the currency exposure, and reduce the risk which can be generated from currency volatility.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “A company headquartered in Vancouver, British Columbia, is building a pipeline in Russia. The invoice amount is due in 90 days and is ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
An owner of a stable of racehorses has been earning below-average returns for over 15 years. To a colleague, he expressed his determination to stay in horse racing until he died because "racing is in my blood.
Answers (1)
A pathway prepares a person for
Answers (1)
12) An integrated pest-management approach to pest control emphasizes which of the following? A) Eradication of the pest population B) Reliance on spraying broad-spectrum pesticides C) Reduction of crop damage to an economically tolerable level D)
Answers (1)
The manager of a certain division at Alpha Manufacturing is evaluated on how efficiently the division uses equipment, buildings, and other assets to generate profits. This division is considered a (n) :
Answers (1)
Scenario: You are the Middle School Principal. As shelter operations are beginning to phase down, you continue to be concerned about the illness suffered by the residents of your facility, which was confirmed to be a food borne illness from donated
Answers (1)
New Questions in Business
The demand for corn has increased in May without any change in supply. Eight months later there still has been no change in corn prices. This is an example of a a. price floor. b. sticky price. c. macroeconomic price. d. price control.
Answers (2)
On his computer, vien saved a 40-page report about safety in restaurants. he remembers the report had some interesting facts about the risks of falling, but he does not remember what page the facts appeared on.
Answers (2)
A monopolist that practices perfect price discrimination A. charges one group of buyers a higher price than another group, such as offering a student discount. B. creates no deadweight loss. C.
Answers (2)
Suggestive selling, accepting credit cards as payment, and expanding operating hours to 24 hours are strategies used by the fast food industry to
Answers (1)
How much student loan interest is tax deductible 2016?
Answers (1)
Home » Business » A company headquartered in Vancouver, British Columbia, is building a pipeline in Russia. The invoice amount is due in 90 days and is denominated at 28 million rubles.
Sign Up Forgot Password?