Options to hedge against exchange rate risk

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Reference no: EM131719788

Small business dilemma

Use of currency futures and options by the sports exports company

  1. How can the sports exports company use currency options to hedge against exchange rate risk?
  2. Are there any limitations of using currency options contracts that would prevent the sports exports company from locking in a specific exchange rate at which it can sell all the pounds it expects to receive in each of the upcoming months?

Reference no: EM131719788

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