A Japanese EXPORTER Has a €1,000,000 Receivable Due in One

question 59

Multiple Choice

A Japanese EXPORTER has a €1,000,000 receivable due in one year. Detail a strategy using options that will eliminate exchange rate risk.

• A)Buy 16 put options on euro, sell 10 call options on yen.
• B)Buy 16 put options on euro, buy 10 call options on yen.
• C)Sell 16 call options on euro, buy 10 put options on yen.
• D)None of the above

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Definitions:

Decision-Making

The process by which individuals or groups select a course of action from among multiple alternatives.

Accountability

The obligation to explain, justify, and take responsibility for one's actions to someone who is entitled to ask.

Evaluation

The systematic determination of a subject's merit, worth, and significance, using criteria governed by a set of standards.

Responsibility

The duty or obligation to perform or complete a task, often with an understanding of the moral, legal, or social consequences of failure to do so.