Drawbacks of using currency option hedging are to be discussed. Concept Introduction: Hedging is defined as strategy used to manage the risk. These strategies are used to offset the losses in investments by taking a different/opposite position in a related asset. These strategies involve derivatives such as futures contracts and options contracts.

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Chapter 6.11, Problem 41P

Summary Introduction

Interpretation: Drawbacks of using currency option hedging are to be discussed.

Concept Introduction:

Hedging is defined as strategy used to manage the risk. These strategies are used to offset the losses in investments by taking a different/opposite position in a related asset. These strategies involve derivatives such as futures contracts and options contracts.

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