The tradeoff 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

Quizplus · Accepted Answer

A call option with a higher exercise price typically has a lower premium, not a higher one, because it is less likely to be exercised profitably.

The Tradeoff When Considering Alternative Call Options to Hedge a Currency