To Hedge a Payables Position with a Currency Option Hedge

question 19

True/False

To hedge a payables position with a currency option hedge, an MNC would write a call option.

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Definitions:

Asch

Pertains to a landmark study or perspective in social psychology exploring conformity and the influence of group pressure on individual behavior.

Cognitive Consistency

Refers to the psychological theory suggesting humans are motivated to maintain consistency between their beliefs, attitudes, and behaviors to reduce mental dissonance.

Perceived Discrepancies

Refers to the differences or gaps that individuals notice between their current state and their desired state or goals.

Motivated

Driven or inclined to act or engage in certain activities out of interest or need.