Hedging With Currency Derivatives. Assume that U.S. firms that have no other for

Question

Hedging With Currency Derivatives. Assume that U.S. firms that have no other foreign transactions anticipate the forward purchase transaction. What are possible ways to hedge the transactions according to the following scenario? Georgetown Co. plans to purchase Japanese goods denominated in yen.

Forward purchase, sell futures, purchase puts

Forward sale, sell futures, purchase puts

Forward purchase, buy futures, purchase puts

Forward purchase, buy futures, purchase calls

Forward purchase, sell futures, purchase puts

Forward sale, sell futures, purchase puts

Forward purchase, buy futures, purchase puts

Forward purchase, buy futures, purchase calls

Explanation / Answer

Forward purchase, buy futures, purchase calls

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