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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
Suggested Answer: D
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32 comments · newest first
KA
Kallie
10 months ago
Wait, are people really using IV? That seems odd.
AF
Afton
10 months ago
I think III is also a big reason.
SH
Shenika
10 months ago
I agree with II, but not so sure about III.
JE
Jesusa
10 months ago
Locking in future values? Sounds risky!
MA
Malinda
11 months ago
Definitely I and II for sure!
GL
Glen
11 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.
CH
Charlene
11 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.
TA
Tammy
11 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?
KA
Kaitlyn
11 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.
JO
Jovita
12 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.
RO
Ronnie
12 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.
RU
Rutha
12 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.
ME
Melvin
1 year 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.
DI
Dick
1 year 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.
VA
Valentine
1 year ago
User 2: I agree, locking in the value of foreign-denominated payables and expected future receivables makes sense.
TE
Tequila
1 year ago
User 1: I think the answer is C) II and III.
IS
Isaac
1 year 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...)
MA
Malcom
1 year ago
User1: I'm going with option A too. Locking in the current value of foreign-denominated payables seems like a smart move.
MI
Micaela
1 year 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.
EL
Elfrieda
1 year ago
I think B is the right choice too. It's important to manage both current and future foreign exchange risks.
LE
Leota
1 year ago
I agree, B does seem like the best option. It covers both locking in current receivables and future payables.
SH
Shawnta
1 year ago
I'm going with D. Why not lock in the value of everything, you know? Gotta cover all your bases, right?
LE
Leota
1 year ago
User3
JA
Jamal
1 year ago
User2
TO
Tomoko
1 year ago
Yes, that's true. It helps them manage risks and plan their finances more effectively.
GE
Gerald
1 year 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.
ME
Melvin
1 year ago
User 3: I agree with Melvin, C seems like the right choice for reasons corporate customers use foreign exchange derivatives.
AN
Annamae
1 year 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.
RO
Rossana
1 year 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.
RO
Royce
1 year ago
I believe they also use derivatives to lock in the value of expected future foreign-denominated receivables.
NE
Nelida
1 year ago
I agree with Rolland, it makes sense to hedge against potential losses from fluctuations in exchange rates.
RO
Rolland
1 year ago
I think corporate customers use foreign exchange derivatives to lock in the current value of foreign-denominated payables.