J&L Co. is a U.S.-based MNC that frequently exports computers to Italy. J&L typically invoices these goods in euros and is concerned that the euro will depreciate in the near future. Which of the following is not an appropriate technique under these circumstances?
A) purchase euro put options.
B) sell euros forward.
C) sell euro futures contracts.
D) sell euro put options.

Question

Quizplus · Accepted Answer

Selling euro put options would not protect J&L Co. from the depreciation of the euro. Instead, it would expose them to further risk if the euro depreciates, as they would be obligated to buy euros at a potentially higher price.

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