CFA Practice Question

There are 253 practice questions for this study session.

CFA Practice Question

A company might wish to use a/an ______ for hedging purposes if they found that an anticipated currency cash flow, which had already been protected with a forward outright contract, was actually going to be delayed for one additional month.

A. FX forward contract.
B. FX swap.
C. FX option.
Correct Answer: B

In this case, the company could simply roll its existing forward outright contract hedge out one month. It would do this by agreeing to a FX swap in which it closed out the existing near date contract and then opened a new one for the desired date one month further out.

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