Lantana Co. pays for many imports denominated in Canadian dollars. It is a major exporter to France and invoices the exports in euros. It also has much business in U.S. dollars. It has no other international business and does not hedge its transactions. It is about to obtain a small loan. It could reduce its exchange rate risk if its loan is denominated in:

Question

Quizplus · Accepted Answer

Since Lantana Co. invoices its exports to France in euros, obtaining a loan in euros would offset some of the exchange rate risk by matching the currency of its income (from exports) with the currency of its debt (the loan).