Receivable by buying foreign currency option

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Reference no: EM131887181

Assume a company has an accounts receivable on its books that is denominated in a foreign currency. Further assume that management of the company decides to hedge against foreign currency risk regarding the accounts receivable by buying a foreign currency option. Would the company buy a put option or a call option? Provide the reasoning (rationale) for your answer.

Reference no: EM131887181

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