Because the value of hard currencies can fluctuate in the world economy, firms can manage their currency risk by engaging in various hedging strategies in world money markets.

Question

Quizplus · Accepted Answer

This statement is true. Firms can use various hedging strategies such as currency futures, forwards, options, and swaps to manage their currency risk in world money markets. These strategies involve taking positions in derivatives markets that offset the potential losses that may occur due to fluctuations in exchange rates.

Because the Value of Hard Currencies Can Fluctuate in the World