Q. Which of the following are rules to use when choosing between forward contracts and currency options: (Solved)
1. When the quantity of a foreign-currency cash outflow is known, buy the currency forward.
2. When the quantity of a foreign-currency cash outflow is unknown, buy the currency forward.
3. When the quantity of a foreign-currency cash flow is partially known and partially uncertain, use a forward contract to hedge the known and unknown portions.
4. When the quantity of a foreign-currency cash inflow is known, buy the currency forwar
- a. When the quantity of a foreign-currency cash outflow is known, buy the currency forward.