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Suppose that Rio Tinto, an Australian MNC, has a receivable of JPY100m in six months and it worries that the A$ is going to depreciate

Suppose that Rio Tinto, an Australian MNC, has a receivable of JPY100m in six months and it worries that the A$ is going to depreciate quite significantly over this 6-month period. Explain how the company can use a money market hedge and an option contract to reduce exchange rate exposure. Between these two approaches, which one would you recommend to Rio Tinto?

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