Question

A Japanese manufacturer sells recorders to a U.S. retailing firm. The manufacturer is to receive $1 million (U.S. dollars) in 90 days. How can he best protect himself against a decline in the dollar?
A) Sell yen calls.B) Sell yen puts.C) Buy yen puts.D) Buy yen calls.

Answer 1

Answer:

option D

Explanation:

the correct answer is option D

Japanese manufacturer sells recorder to U S retailing firm and the manufacturer is to receive $1 million in 90 days but the dollars start declining to protect himself he should Buy yen Calls.

As the dollar value decreases the manufacture will have to face loss and to overcome his loss the best way he can do is Buy yen calls.