In light of the CFO's analysis, how does the efficacy of using an option for hedging purposes compare to that of employing a forward position? Provide a detailed comparison of the two strategies, considering their potential benefits and drawbacks in mitigating financial risk.

Exam-Like

The CFO's analysis is correct and the company is better off whichever way the EUR rate goes

9.1%

The CFO's analysis is not correct and the company will suffer if the EUR appreciates sharply against the USD

24.2%

The CFO's analysis is not correct and the company will suffer if the EUR moves within a narrow range

18.2%

The CFO's analysis is not correct and the company will suffer if the EUR depreciates sharply against the USD

48.5%

Financial Risk Manager Part 1