Question

Linden Co. has 1,000,000 euros as payables due in 90 days, and is certain that euro is going to depreciate substantially over time. Assuming the firm is correct, the ideal strategy is to____________.

a. sell euros forward
b. purchase euro currency put options.
c. purchase euro currency call options.
d. purchase euros forward.
e. remain unhedged

Answer 1

e. remain unhedged

Step-by-step explanation:

linden Co. has 1,000,000 euros as payables due in 90 days and is certain that the euro is going to depreciate substantially over time. Assuming the firm is correct, the ideal strategy is to: remain unhedged.