If currency fluctuations move in favor of a business and they already have a forward hedge...
If currency fluctuations move in favor of a business and they already have a forward hedge in place, what happens?
| A. |
They can choose not to exercise the forward contract |
|
| B. |
They will have increased costs |
|
| C. |
They may have an opportunity cost |
|
| D. |
Their revenues will be reduced |
Homework Answers
They may have an opportunity cost
The benefit from the change in foreign exchange rate will not be there as it is hedged using forward contract.
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