ABC is an Australian firm. Assume the following:

1. ABC needs 100M HKD for 12 months
2. After 12 months, ABC wishes to sell the HKD
3. The firm currently does not hold any HKD assets
4. The firm is risk-averse and wishes to minimize transaction costs
5. The current spot rate is E_AUD/HKD=0.22

What should be ABC's strategy?

Answer rating: 100% (QA)

ABCs strategy will depend on several factors including the expected future exchange rate between AUD ... View the full answer