To hedge a contingent exposure, in which an MNC's exposure is contingent on a specific event occurring, the appropriate hedge would be a(n) ____ hedge.
A)money market
B)futures
C)forward
D)options

Question

Quizplus · Accepted Answer

Options provide the most flexibility and are the best choice for hedging contingent exposures as the MNC can choose to exercise or not exercise the option depending on the occurrence of the specific event. Money market, futures, and forward hedges are all fixed in nature and may not be suitable for hedging contingent exposures.

To Hedge a Contingent Exposure, in Which an MNC's Exposure