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1) What could TGA do to reduce risk of euro value dropping relative to dollar before 500000 euros is recieved?
a) deposit 500000 euro immediatey
b) enter into forward contract to sell 500000 euros in 3 months time
c) enter into interest rate swap for 3 monthsSir just want to ask that why option c cannot be the correct answer?
2) Share price reaction occurs before announcements are made public, Sir why it is an evidence that markets are strong form efficient?
1. An interest rate swap will help interest rates, but will certainly not help against exchange rate risk.
2. Because markets would already have knowledge of all relevant information.
But isn’t more an evidence of semi strong form efficient rather than strong form efficient?
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