Assume that the transactions listed in the first column of the table below are anticipated by U.S.
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Assume that the transactions listed in the first column of the table below are anticipated by U.S. firms that have no other foreign transactions. Place an “X” in the table wherever you see possible ways to hedge each of the transactions.
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Forward Contract Futures Contract Options Contract Forward Forward Buy Purchase Sale Sell Futures Futures a Call a Put a. Georgetown Co. plans to purchase b. Harvard, Inc., will sell goods to Japan, c. Yale Corp. has a subsidiary Japanese goods denominated in yen. denominated in yen. in Australia that will be remitting funds to the US. parent. d. Brown, Inc., needs to pay off existing loans that are denominated in Canadian dollars. e. Princeton Co. may purchase a company in Japan in the near future (but the deal may not go through).
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