A customer would hedge a currency exposure with a forward FX time option if:
A) he is unsure about the presence of a currency risk
B) the amount of the currency risk is not precisely known in advance
C) his currency risk might change over time
D) the precise maturity of the currency risk is not known

Question

Quizplus · Accepted Answer

A forward FX time option is used when the precise maturity of the currency risk is not known, allowing flexibility in the timing of the hedge.

A Customer Would Hedge a Currency Exposure with a Forward