As a result of expanding into Canada, a U.

Vendor: AFP
Product: CTP
Update on: Oct 21, 2025
Questions: 1076

AFP CTP Question Answer

As a result of expanding into Canada, a U.S. company expects to receive Canadian dollar revenues on a regular basis. It decides to set up a production facility in Canada to better serve its new customer base. What could the company do to create a natural hedge to offset the exposure?

Enter into a forward contract with its bank to buy USD and sell CAD.

Finance the capital expenditures with a CAD denominated bond.

Enter into contracts that will take advantage of the differences in the interest rates of the two currencies.