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

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.

Quizplus · Accepted Answer

Selling euro put options would expose J&L to potential losses if the euro depreciates, which is the opposite of their desired outcome. Purchasing euro put options, selling euros forward, or selling euro futures contracts, on the other hand, would all provide some level of protection against a potential euro depreciation.

J&L Co Is a U