For contingency exposure of foreign exchange, the best derivative that can be used to hedge is

A. Forwards

B. Futures

C. Options

D. Swaps

Answer: Option C

Solution(By Examveda Team)

For contingency exposure of foreign exchange, the best derivative that can be used to hedge is Options. Options are financial instruments that are derivatives based on the value of underlying securities such as stocks. An options contract offers the buyer the opportunity to buy or sell depending on the type of contract they hold the underlying asset.