Compared to long hedging, the advantage to using a call option is: A. Call options involve a one-time fixed payment and no need for a margin account B. Call options provide a form of "price insurance" and protect from a worst case scenario C. Call options allow for additional price gains if futures market prices continue to decline D. All the above are advantages to using puts instead of short hedging
Compared to long hedging, the advantage to using a call option is: A. Call options involve a one-time fixed payment and no need for a margin account B. Call options provide a form of "price insurance" and protect from a worst case scenario C. Call options allow for additional price gains if futures market prices continue to decline D. All the above are advantages to using puts instead of short hedging
Chapter5: Currency Derivatives
Section: Chapter Questions
Problem 4BIC
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Compared to long hedging, the advantage to using a call option is:
A. Call options involve a one-time fixed payment and no need for a margin account
B. Call options provide a form of "price insurance" and protect from a worst case scenario
C. Call options allow for additional price gains if futures market prices continue to decline
D. All the above are advantages to using puts instead of short hedging
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