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Q: Exchange Risk ( No Answer,   1 Comment )
Question  
Subject: Exchange Risk
Category: Business and Money
Asked by: missmallprincess-ga
List Price: $4.00		 Posted: 27 May 2004 08:55 PDT
Expires: 27 May 2004 10:39 PDT
Question ID: 352700 
An importer in the United States is due to take delivery of silk
scarves from Italy in 6 months.  The price is fixed in lire.  Which of
the following transactions could eliminate the importer?s exchange
risk?

Sell 6-month call options on lire
Buy lire forward
Sell lire forward
Sell lire in currency futures market
Borrow lire; buy dollars at the spot exchange rate
Sell lire at the spot exchange rate; lend dollars
Answer  
There is no answer at this time.

Comments  
Subject: Re: Exchange Risk
From: probonopublico-ga on 27 May 2004 09:36 PDT		  
Buy Lire forward.

But do make sure that you match the delivery date of the Lire with
your Commitment to pay.
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