Which of the following describes what a company should do to create a range forward contract in order to hedge foreign currency that will be paid?
A. Buy a put and sell a call on the currency with the strike price of the put higher than that of the call
B. Buy a put and sell a call on the currency with the strike price of the put lower than that of the call
C. Buy a call and sell a put on the currency with the strike price of the put higher than that of the call
D. Buy a call and sell a put on the currency with the strike price of the put lower than that of the call
D
The company wants to ensure that the price paid for the foreign currency will be between K1 and K2 . It does this by selling a put option with strike price K1 and buying a call option with strike price K2 .
You might also like to view...
The GATT 1994 Agreement on Import Licensing Procedures provides strict guidelines for licensing paperwork. Licenses can be refused if any of the procedures are not strictly followed
Indicate whether the statement is true or false
Individuals who violate the rules of the New York Stock Exchange may face expulsion from the Exchange
a. True b. False Indicate whether the statement is true or false