Multinational firms often use currency forward contracts and options to hedge foreign exchange rate risk.

Question

Quizplus · Accepted Answer

Multinational firms typically use currency forward contracts and options to manage their foreign exchange rate risk. These financial instruments allow the firm to lock in a rate for buying or selling a foreign currency at a future date, reducing uncertainty in their cash flows and protecting against sudden currency fluctuations.

Multinational Firms Often Use Currency Forward Contracts and Options to Hedge