In general, it is more difficult to effectively hedge economic or translation exposure than to hedge transaction exposure.

Question

Quizplus · Accepted Answer

Transaction exposure can be easily hedged by using forward contracts, options, or other financial instruments. However, economic and translation exposure are more difficult to hedge because they involve a company's overall strategy and operations, and may require complex hedging strategies or adjustments to the firm's business model.

In General, It Is More Difficult to Effectively Hedge Economic