Monson Co., based in the United States, exports products to Japan denominated in yen. If the forecasted value of the yen is substantially than the forward rate, Monson Co. will likely decide the payments.

higher; not to hedge.

Explanation: The question is not complete. Here is the complete question:

Monson Co., based in the United States, exports products to Japan denominated in yen. If the forecasted value of the yen is substantially than the forward rate, Monson Co. will likely decide the payments.

a. higher; to hedge

b. lower; not to hedge.

c. higher; not to hedge.

d. none of the above.

The answer is option C. Hedging is a way of minimizing the risks involved in foreign exchange. In the above scenario, since the predicted value of yen is higher than its forward rate, there is no reason for the company to hedge the payments.

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