1. Your firm is based in the U.S. and one of your primary suppliers is located in the Czech Republic. One way for your firm to transfer foreign exchange risk (associated with your firm s accounts payable) to your supplier is to _____.

a. sell the Czech supplier a futures contract

b. increase the price of the merchandise

c. have the invoice denominated in dollars

d. both a and b

2. A foreign exchange rate may be defined as _____.

a. the number of units of gold that can be bought in a foreign country for one unit of that country's currency

b. the amount of a country s currency that can be purchased an unit of another country s currency

c. the interest rate of the overnight funds in the foreign country's money market

d. the price of a futures contract in the financial futures market