If a firm planning to hedge receivables is certain of the future direction a spot rate will move, and requires a tailor-made hedge in terms of amount and maturity date, it should use a

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A forward contract allows the firm to lock in a specific exchange rate for a specific amount of currency on a specific date in the future. It is a tailor-made hedge that can be customized to the firm's specific needs in terms of amount and maturity date. If the firm is certain of the future direction of the spot rate, it can use a forward contract to lock in a rate that would be advantageous for them. Call options would not be the best choice as they give the right, but not the obligation, to buy a currency at a specific rate. Futures contracts are standardized contracts and may not be suitable for the firm's specific needs, and put options contracts give the right, but not the obligation, to sell a currency at a specific rate.

If a Firm Planning to Hedge Receivables Is Certain of the Future