Which of the following might be used to hedge exposure in the long run?
A) long-term forward contract
B) money market hedge
C) parallel loan
D) long-term forward contract AND parallel loan

Question

Quizplus · Accepted Answer

Long-term forward contracts and parallel loans are both financial instruments that can be used to hedge exposure in the long run. A long-term forward contract locks in an exchange rate for a transaction that will occur at a future date, providing certainty about the cost or value of the transaction. A parallel loan involves two companies in different countries lending each other a specified amount of their home currency, thus avoiding foreign exchange risk. Both methods are effective for long-term hedging.

Which of the Following Might Be Used to Hedge Exposure