A firm that spreads out its activities in a number of countries in different currency zones in order to offset the currency losses in certain regions through gains in other regions is engaged in:
A)Tariffs.
B)Local content requirements.
C) Strategic hedging.
D) Sunk costs.

Question

A firm that spreads out its activities in a number of countries in different currency zones in order to offset the currency losses in certain regions through gains in other regions is engaged in:
A)​Tariffs.
B)​Local content requirements.
C) ​Strategic hedging.
D) ​Sunk costs.

Quizplus · Accepted Answer

The firm is engaging in strategic hedging by spreading out its activities in different currency zones to offset currency losses in certain regions through gains in other regions. This helps to minimize the risk of currency fluctuations and ensure stable profits. Tariffs and local content requirements are trade barriers and not relevant to this scenario. Sunk costs refer to investments that cannot be recovered and are not relevant to this scenario.

A Firm That Spreads Out Its Activities in a Number