1.

Which of the following statements is not correct with regard to

foreign currency hedges?
a. They are executory contract
b. They can only be used by large companies
c. They manage foreign exchange fluctuation risk
d. They establish a fixed exchange rate between currencies

2. A foreign currency forward contract has which of the following features?

a. The exchange of the currency may or may not occur
b. The parties to the contract do not know the number of currency units that
will be exchanged until the date the forward contract matures
c. The parties to the contract must record journal entries at the date the
forward contract is established
d. The parties to the contract must exchange the currency
regardless at the exchange rate on the date the forward
contract matures

3. Which of the following statements is not correct with regard to

foreign currency forward contracts?
a. The contract is between an individual buyer and seller
b. The parties do not have to exchange the currency if the
exchange rate is not favorable
c. The forward contract can be for any number of current units
d. The exchange can take place at any time

4. What is the relationship between the foregin currency spot rate

and the forward rate?
a. The spot rate is always higher
b. The forward rate is always higher
c. The two rates always start out the same
d. The rates can be different (either can be higher) or they
can be the same