If a Salerno plc desired to lock in a minimum rate at which it could sell its net receivables in Japanese yen but wanted to be able to capitalize if the yen appreciates substantially against the pound by the time payment arrives, the most appropriate hedge would be:
A) a money market hedge.
B) a forward sale of yen.
C) purchasing yen call options.
D) purchasing yen put options.
E) selling yen put options.

Question

Quizplus · Accepted Answer

Purchasing yen put options allows Salerno plc to lock in a minimum rate to sell yen (exercise price) while still benefiting if the yen appreciates against the pound, as they can sell at the market rate if it is higher than the exercise price.

If a Salerno Plc Desired to Lock in a Minimum