With the use of forwards, a perfect hedge is possible.

Name: With the use of forwards, a perfect hedge is possible.
Brand: Quizplus
Rating: 4.8 (38 reviews)

Question

Quizplus · Accepted Answer

Forwards can be used to lock in a certain exchange rate for a future transaction, which can effectively eliminate the risk of exchange rate fluctuations. This allows for a perfect hedge, where the gains or losses from the original transaction are fully offset by gains or losses from the forward contract.

With the Use of Forwards, a Perfect Hedge Is Possible