Derivatives and Currency Management

CFA Level 3 · 5 questions

derivatives and currency management1 / 5

Question 1Easy

An investor holds a USD-denominated bond and is concerned about depreciation of the USD relative to the EUR. Which derivative instrument would most directly hedge this currency exposure?

A.A currency forward contract to sell USD and buy EUR at a fixed rateB.A USD interest rate swapC.A call option on the EUR/USD exchange rateD.A commodity futures contract on oil priced in USD

Select an answer and check it