ACI
3I0-012 · Question #164
If you sell USD 3-month forward to a client against EUR, what should you do to hedge your position?
The correct answer is D. Sell EUR/USD in the spot market, borrow EUR for 3 months and lend USD for 3 months. See the full explanation below for the reasoning.
Question
If you sell USD 3-month forward to a client against EUR, what should you do to hedge your position?
Options
- ABuy a 3-month EUR/USD outright forward
- BBuy USD spot, and sell and buy a 3-month EUR/USD FX swap
- CSell EUR/USD in the spot market, lend EUR for 3 months and borrow USD for 3 months
- DSell EUR/USD in the spot market, borrow EUR for 3 months and lend USD for 3 months
How the community answered
(56 responses)- A13% (7)
- B5% (3)
- C4% (2)
- D79% (44)
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