Futures, forward, and money market hedges all lock into a certain price to be received from hedging a receivable. For a currency option hedge with a put option, however, the exact amount received is not known until the option is (or is not) exercised.

Question

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A currency option hedge with a put option provides the right, but not the obligation, to sell currency at a predetermined exchange rate. Therefore, the exact amount received from exercising the option is not known until the option is actually exercised.

Futures, Forward, and Money Market Hedges All Lock into a Certain