Problem

The Sports Exports Company receives British pounds each month as payment for the footbal...

The Sports Exports Company receives British pounds each month as payment for the footballs that it exports. It anticipates that the pound will depreciate over time against the U.S. dollar.

How can the Sports Exports Company use currency options to hedge against exchange rate risk? Are there any limitations of using currency options con: tracts that would prevent the Sports Exports Company from locking in a specific exchange rate at which it can sell all the pounds it expects to receive in each of the upcoming months?

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