An MNC Wants to Hedge Against the Potential Risk That

question 23

Multiple Choice

An MNC wants to hedge against the potential risk that the euro denominating its payables appreciates against the dollar. Yet, it also wants flexibility to benefit by buying euros at the spot rate when payables are due if the euro depreciates by that time. The appropriate hedge for this MNC would be a(n) ____ hedge.

• A) money market
• B) futures
• C) put option
• D) call option

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Definitions:

Cross-Functional Team

A team composed of members from different departments or areas of expertise, working together towards a common goal.

Collaboration

The act of working together with one or more people to achieve a common goal or project.

Teamwork

Teamwork involves the collaborative effort of a group to achieve a common goal or to complete a task in the most effective and efficient way.

Coordinated Series

A sequence of elements, events, or activities that are planned or occur in a mutually supportive manner.