Using "Lead and Lag" approach of natural hedging, firms can reduce both operating and transaction exposure by accelerating or decelerating the timing of payments that must be made or received in foreign currencies. Which of the following is incorrect in relation to the Lead and Lag method of natural hedges?

Question 19 options:

a)	Use Lag approach when exporter is expecting the home currency to depreciate

b)	Use Lead approach when importer is expecting the home currency to depreciate

c)	Use Lag approach when importer is expecting the home currency to appreciate

d)	Use Lead approach when importer is expecting the home currency to appreciate

Question 20 (1 point)

Apex Corporation must pay its Japanese supplier 125 million in three months. It is thinking of buying 20 yen call options (contract size is 6.25 million) at a strike price of $0.00800 in order to protect against the risk of a rising yen. The premium is 0.015 cents per yen. Which of the following statements is correct in relation to this call option contract?

Question 20 options:

a)	The option contract becomes worthless if the spot price at the time of expiry of this contract is $0.00810/

b)	Apex remains indifferent if the spot price at the time of expiry of this contract is $0.00810/

c)	Apex exercises the contract if the spot price at the time of expiry of this contract is $0.007900/

d)	The option is deep in-the-money if the spot price at the time of expiry of this contract is $0.008150/