The trade-off when considering alternative call options to hedge a currency position is that an MNC can obtain a call option with a higher exercise price, but would have to pay a higher premium.

Question

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An MNC can obtain a call option with a higher exercise price at a lower premium, not a higher premium. The higher the exercise price relative to the spot rate, the less expensive the premium because the option is less likely to be exercised.

The Trade-Off When Considering Alternative Call Options to Hedge a Currency