Exchange rate risk can be hedged
A)with futures and options.
B)by purchasing funds in the repurchase agreement, fed funds, or Eurodollar markets.
C)by using adjustable rate loans.
D)by diversifying portfolios.

Question

Quizplus · Accepted Answer

Exchange rate risk can be hedged using futures and options. This involves taking a position in a futures contract or an option contract that enables an investor to exchange one currency for another at a specified exchange rate on a future date, which can help mitigate potential losses due to exchange rate fluctuations.

Exchange Rate Risk Can Be Hedged