An advantage of using options to hedge is that the MNC can let the option expire. However, a disadvantage of using options is that a premium must be paid for it.

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Quizplus · Accepted Answer

This is because options offer the flexibility to let them expire if they are not needed, without any further obligation or cost. However, it is true that options come with a premium cost, which represents the price paid for the right to exercise the option.

An Advantage of Using Options to Hedge Is That the MNC