Though they contain the major points sought, the student's response should provide further insight into many of the points. Simply repeating the major bullet points does not necessarily demonstrate the required level of understanding of the subject. You are consultant to an Irish company which is due to make payment for imported components in 90 days time.
All companies are interested in future cash flows.
Buy dollars today and place them in a dollar-denominated deposit which matures on the date of required payment. Assuming you possess the necessary funds you can purchase your dollars today and deposit them in New York. Maximum 9 marks Let the market ride and buy the dollars at the spot rate of exchange on the day that payment is due. While it is a gamble, the strategy does have the advantage of flexibility and if circumstances change over the period you can change course. Maximum 9 marks Take out a forward contract today to buy the dollars in 90 days time at a price agreed today.