Why might forward contracts be advantageous for transactions

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Forward versus currency option contracts. What are the advantages and disadvantages to an MNC that uses currency options on dollars rather than a forward contract on dollars to hedge its exposure in dollars? Explain why an MNC may use forward contracts to hedge committed transactions and use currency options to hedge contracts that are anticipated but not committed. Why might forward contracts be advantageous for committed transactions, and currency options be advantageous for anticipated transactions?

Reference no: EM13936173

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