Phil Johnson, CFA, is a portfolio manager in the United States and manages a portfolio denominated in yen. Johnson has been using forward contracts on the yen to hedge this portfolio, but now he is considering using put options. Johnson: | A) | may choose to use put options if he wishes to more perfectly hedge his portfolio than was possible with the forward contracts. |
| | B) | may choose put options if he wishes to lower the upfront hedging costs from what he incurred using forward contracts. |
| | C) | should never use put options to hedge in this situation. |
| D) | may choose to use put options if he wishes to allow for upside potential on currency changes while hedging downside risk. |
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Answer and Explanation
Put options offer the type of benefit described in the answer. They allow the upside potential of a yen appreciation, but there is a cost at the initiation of the hedge not incurred with forward and futures contracts.
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发表于 2008-9-18 11:58
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