Which of the following is the least effective way of hedging transaction exposure in the long run
A) long-term forward contract.
B) currency swap.
C) parallel loan.
D) money market hedge.

Question

Quizplus · Accepted Answer

Money market hedge involves borrowing or lending in different currencies in order to offset transaction exposure. This method is generally considered the least effective as it only provides a short-term solution and often incurs high transaction costs. The other options - long-term forward contract, currency swap, and parallel loan - are all effective ways of hedging transaction exposure in the long run.

Which of the Following Is the Least Effective Way of Hedging