Choosing which transaction exposure hedging strategy is best for a particular transaction depends on which of the following?

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All of the above factors play a role in determining which transaction exposure hedging strategy is best suited for a particular transaction. The firm's risk tolerance will determine how much risk it is willing to take on and how aggressively it wants to hedge its exposure. The firm's expectations about changes in exchange rates will help determine whether it should utilize a hedging strategy that provides protection against adverse exchange rate movements or one that allows it to benefit from favorable fluctuations. Finally, the costs associated with each alternative will need to be taken into account in order to determine the most cost-effective solution.

Choosing Which Transaction Exposure Hedging Strategy Is Best for a Particular