To hedge a receivables position with a currency option hedge, an MNC would buy a put option.

Name: To hedge a receivables position with a currency option hedge, an MNC would buy a put option.
Brand: Quizplus
Rating: 4.9 (37 reviews)

Question

Quizplus · Accepted Answer

Buying a put option gives the MNC the right, but not the obligation, to sell the underlying currency at a predetermined price (strike price) within a certain period of time. This would protect the MNC from adverse exchange rate movements and allow them to sell the receivables at a guaranteed minimum price.

To Hedge a Receivables Position with a Currency Option Hedge