Write a short essay briefly summarizing the advantages and disadvantages of currency options as compared to forward contracts when hedging payables. Explain the conditions (regarding your expectations of the future exchange rate and the uncertainty surrounding the future exchange rate) that might cause you to use currency options instead of forward contracts if you were exposed to payables. Do you think you would use currency options or for ward contracts more frequently?
Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*
*Response times vary by subject and question complexity. Median response time is 34 minutes and may be longer for new subjects.