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Question
Assume that a Canadian exporter sells to a French importer and denominates the sale in euros, which opens the exporter up to foreign exchange risk. Also, assume that the exporter goes to its investment bank and enters into a contract with the bank to gain the right but not the obligation to deliver euros for Canadian dollars at an agreed-upon exchange rate. This is an example of a ________.
A) lead strategy
B) lag strategy
C) foreign-currency option
D) forward contract
Answer
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