To Hedge a Payable Position with a Currency Option Hedge

question 87

True/False

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

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Definitions:

Profits Maximization

The process or strategy employed by a business to increase its net earnings and achieve the highest level of profit possible.

Price Received

The amount of money paid to a producer or seller for a product or service.

Production Function

A mathematical model describing the relationship between input factors (like labor and capital) and output, indicating how much can be produced with given resources.

Supply Function

A mathematical relation showing the quantity of a good that producers are willing and able to sell at different prices, holding other factors constant.