If a corporation hedges payables with currency call options, it will ____ if the value of the foreign currency is ____ than the exercise price when the payables are due.

Question

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When hedging payables with currency call options, a corporation will exercise the option if the value of the foreign currency is greater than the exercise price, benefiting from the right to buy at a lower price. Conversely, if the foreign currency's value is lower than the exercise price, the corporation will let the option expire and buy the currency at the lower market price, avoiding additional expense.

If a Corporation Hedges Payables with Currency Call Options, It