Assume a company needs to hedge payables. Which of the following conditions has to be met so a company would choose the options hedge? The break-even spot exchange rate is greater than the forward exchange rate. The break-even spot exchange rate is less than the forward exchange rate. The break-even spot exchange rate is less than the spot exchange rate. The break-even spot exchange rate is greater than the spot exchange rate.

International Financial Management
14th Edition
ISBN:9780357130698
Author:Madura
Publisher:Madura
Chapter20: Short-term Financing
Section: Chapter Questions
Problem 2SBD
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Assume a company needs to hedge payables. Which of the following conditions has to be met so a company would choose the options hedge?

The break-even spot exchange rate is greater than the forward exchange rate.

The break-even spot exchange rate is less than the forward exchange rate.

The break-even spot exchange rate is less than the spot exchange rate.

The break-even spot exchange rate is greater than the spot exchange rate.

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