Question: Complete the blanks in order, in the box below. In class, we talked about the two financial instruments that firms can use to avoid currency

Complete the blanks in order, in the box below.

In class, we talked about the two financial instruments that firms can use to avoid currency risk. These are (1) _________________ and (2) _______________. (2 points each)

Among these two financial instruments, assume that you purchase (3) ____________ , which gives you the right, but not the obligation, to buy 1 million USD at .8 million euros on May 1.

When you receive .8 million euros from your buyer on May 1, if you find that the value of the euro (4) _____________, you will use this financial instrument to avoid currency risk. (3 points each)

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