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Students also viewedWhich tactic will help a company hedge against currency fluctuations?Forward contracts, or forward exchange contracts, are agreements whereby a business accepts to buy or sell a specific amount of a future currency on a specific future date. This solution enables the business to protect itself against any fluctuations that may occur until this specific date.
How can a company overcome currency fluctuations?A forward contract avoids fluctuations in the value of a transaction when a currency conversion is made in the future. Fluctuations are avoided by fixing the value of the exchange rate at the value it is on the day the deal is made as the one that will be taken into account at settlement.
How did Bretton Woods system work?In 1958, the Bretton Woods system became fully functional as currencies became convertible. Countries settled international balances in dollars, and US dollars were convertible to gold at a fixed exchange rate of $35 an ounce.
How can exchange rates be manipulated?Exchange rates can be manipulated by buying or selling currencies on the foreign exchange market. To raise the value of the pound the Bank of England buys pounds, and to lower the value, it sells pounds. The Bank of England can influence exchange rates through its Exchange Equalisation Account (EEA).
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Which tactic will help a company hedge against currency fluctuations? quizlet
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