Question

Johnson Co. has 1,000,000 euros as payables due in 30 days, and is certain that the euro is going to appreciate substantially over time. Assuming the firm is correct, the ideal strategy is to: a.remain unhedged. b.purchase euro currency put options. c.purchase euro currency call options. d.sell euros forward. e.purchase euros forward.

Answer 1

Based on the fact that the Euro will appreciate, the best thing for Johnson Co. to do is to e.purchase euros forward.

What should Johnson Co. do?

The fact that the Euro is going to appreciate in value means that Johnson Co. will have to pay more in future.

They should therefore lock in a favorable Euro rate now by purchasing Euros at a forward rate.

Find out more on purchasing forward at https://brainly.com/question/14090802.

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