If a Corporation Hedges Payables with Currency Call Options, It

question 62

Multiple Choice

If a corporation hedges payables with currency call options, it will ____ if the value of the foreign currency is ____ than the exercise price when the payables are due.

• A) exercise the option; greater
• B) exercise the option; less
• C) let the option expire; greater
• D) let the option expire; less
• E) A and D

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Definitions:

Distributors

Entities that purchase products from manufacturers and sell them to retailers or consumers, acting as intermediaries in the supply chain.

Labor Unions

Organizations that represent the collective interests of workers in negotiations with employers over wages, work conditions, and rights.