If I sell an at-the-money put option on the Euro and delta hedge it with a position in Euro according to the delta hedge ratio, which of the following is correct?     I will need to buy Euro if the Euro weakens.     I will need to sell Euro if the Euro strengthens.     I will need to sell Euro if the Euro weakens

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A: The answer to the question is given below :

Q: Please step by step solutions

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Exchange Rate Risk

It is the possibility that the value of a currency will fluctuate in the future. In the wake of globalization, business establishments have increasingly ventured into international markets. The volume of international trade has prospered excellently in the near past and is expected to be more affluent in the future. The use of exchange-traded derivative financial instruments has been multi-folded to provide for the requirements of various MNCs and offshore potential investors. Most banks and financial institutions have helped integrate the global economies. Our Government has introduced some bold and extreme measures to fulfil the purpose behind the fiscal, industrial, and monetary policies. The enactment of GST is a huge step towards streamlining the taxation system of the country. Owing to Covid-19, this aspect of corporate risk management has become critical.