New Year Sale 2026! Hurry Up, Grab the Special Discount - Save 25% - Ends In 00:00:00 Coupon code: SAVE25
Welcome to Pass4Success

- Free Preparation Discussions
Mail Us support@pass4success.com
Location US
Mob_nav_barsMENU

GARP 2016-FRR Exam - Topic 2 Question 8 Discussion

Actual exam question for GARP's 2016-FRR exam
Question #: 8
Topic #: 2
[All 2016-FRR Questions]

For which one of the following four reasons do corporate customers use foreign exchange derivatives?

I . To lock in the current value of foreign-denominated receivables

II . To lock in the current value of foreign-denominated payables

III . To lock in the value of expected future foreign-denominated receivables

IV . To lock in the value of expected future foreign-denominated payables

Show Suggested Answer Hide Answer
Suggested Answer: D

by Clay at Jul 06, 2025, 12:32 AM

Limited Time Offer

25%

Off

Get Premium 2016-FRR Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

0/2000 characters
Submit Cancel
Kallie
2 months ago
Wait, are people really using IV? That seems odd.
upvoted 0 times
...
Afton
2 months ago
I think III is also a big reason.
upvoted 0 times
...
Shenika
3 months ago
I agree with II, but not so sure about III.
upvoted 0 times
...
Jesusa
3 months ago
Locking in future values? Sounds risky!
upvoted 0 times
...
Malinda
3 months ago
Definitely I and II for sure!
upvoted 0 times
...
Glen
3 months ago
I lean towards option D because it seems like all four reasons are valid for using derivatives, but I could be overthinking it.
upvoted 0 times
...
Charlene
4 months ago
I feel like I might be mixing up the definitions. I know locking in current values is crucial, but I can't remember if that applies to both receivables and payables.
upvoted 0 times
...
Tammy
4 months ago
I think we practiced a question similar to this, and I recall that companies often hedge against future payables. So maybe III and IV are important?
upvoted 0 times
...
Kaitlyn
4 months ago
I remember we discussed how locking in values for receivables and payables can help manage risk, but I'm not sure if it's just for current values or also for future ones.
upvoted 0 times
...
Jovita
4 months ago
This is a good test of my understanding of foreign exchange derivatives. I'll review each option and try to determine which one or combination best captures the key reasons companies use these instruments.
upvoted 0 times
...
Ronnie
4 months ago
Okay, I think I've got this. Corporate customers use foreign exchange derivatives to lock in the current or expected future value of their foreign-denominated receivables and payables. So the answer is likely a combination of the options provided.
upvoted 0 times
...
Rutha
4 months ago
Hmm, I'm a bit unsure about this one. I know foreign exchange derivatives are used to manage currency risk, but I'm not totally clear on the specific reasons. I'll have to think it through carefully.
upvoted 0 times
...
Melvin
5 months ago
This question seems straightforward. I'll carefully read through the options and think about which ones make the most sense for why corporate customers use foreign exchange derivatives.
upvoted 0 times
...
Dick
6 months ago
Haha, this question is a real foreign exchange conundrum, isn't it? I'm going to have to go with C. Sounds like the most logical choice to me.
upvoted 0 times
Valentine
5 months ago
User 2: I agree, locking in the value of foreign-denominated payables and expected future receivables makes sense.
upvoted 0 times
...
Tequila
5 months ago
User 1: I think the answer is C) II and III.
upvoted 0 times
...
...
Isaac
7 months ago
I'm feeling lucky, so I'm picking A. Locking in the current value of foreign-denominated payables, that's where it's at! (And maybe a little bit of Vegas on the side, shhh...)
upvoted 0 times
Malcom
6 months ago
User1: I'm going with option A too. Locking in the current value of foreign-denominated payables seems like a smart move.
upvoted 0 times
...
...
Micaela
7 months ago
B sounds good to me. Locking in the current value of foreign-denominated receivables and expected future foreign-denominated payables. That's the way to go, if you ask me.
upvoted 0 times
Elfrieda
5 months ago
I think B is the right choice too. It's important to manage both current and future foreign exchange risks.
upvoted 0 times
...
Leota
6 months ago
I agree, B does seem like the best option. It covers both locking in current receivables and future payables.
upvoted 0 times
...
...
Shawnta
7 months ago
I'm going with D. Why not lock in the value of everything, you know? Gotta cover all your bases, right?
upvoted 0 times
Leota
6 months ago
User3
upvoted 0 times
...
Jamal
7 months ago
User2
upvoted 0 times
...
...
Tomoko
7 months ago
Yes, that's true. It helps them manage risks and plan their finances more effectively.
upvoted 0 times
...
Gerald
8 months ago
Hmm, I think the correct answer is C. Locking in the value of foreign-denominated payables and expected future foreign-denominated receivables seems like a common practice for corporate customers.
upvoted 0 times
Melvin
7 months ago
User 3: I agree with Melvin, C seems like the right choice for reasons corporate customers use foreign exchange derivatives.
upvoted 0 times
...
Annamae
7 months ago
User 2: I believe it's C. Locking in the current value of foreign-denominated payables and expected future foreign-denominated receivables seems like a common practice for corporate customers.
upvoted 0 times
...
Rossana
7 months ago
User 1: I think the answer is B. Locking in the current value of foreign-denominated receivables and expected future foreign-denominated payables makes sense.
upvoted 0 times
...
...
Royce
8 months ago
I believe they also use derivatives to lock in the value of expected future foreign-denominated receivables.
upvoted 0 times
...
Nelida
8 months ago
I agree with Rolland, it makes sense to hedge against potential losses from fluctuations in exchange rates.
upvoted 0 times
...
Rolland
8 months ago
I think corporate customers use foreign exchange derivatives to lock in the current value of foreign-denominated payables.
upvoted 0 times
...

Save Cancel