Question

If your company is expected to pay 100 million to a company in Japan by 9/30/21 list 2 ways that my company can hedge the transaction

Answer 1

The company can opt for futures contracts.

The company can go for matching of receipts.

Step-by-step explanation:

There are various techniques for transferring foreign exchange risk. Many organizations go for hedging techniques to minimize the risk exposure with the fluctuation in the foreign currency. When a company is expecting payments in six months, it can go for futures contract or matching the payment with the equal amount receipts.