Treasury management of currency risk exposure ideally entails each of the following EXCEPT
A) identify those currencies to which the firm is exposed
B) estimate the firm's sensitivity to changes in these currency values
C) decide whether to hedge currency exposures in accordance with the firm's overall risk management policy
D) select an appropriate hedging instrument or hedging strategy
E) lock in the hedge and then wait until expiration to evaluate performance

Question

Quizplus · Accepted Answer

Locking in the hedge and waiting until expiration to evaluate performance is not an ideal approach to treasury management of currency risk exposure. It is important to continually monitor and evaluate the performance of the hedge to ensure that it is effective in reducing currency risk exposure. Therefore, this choice does not belong in the list of ideal steps for managing currency risk exposure.

Treasury Management of Currency Risk Exposure Ideally Entails Each of the Following