The potential benefits from using foreign exchange derivatives are independent of the expected exchange rate movements.

Question

Quizplus · Accepted Answer

The potential benefits from using foreign exchange derivatives, such as hedging against currency risk, are highly dependent on the expected exchange rate movements. These financial instruments are used to lock in exchange rates or speculate on future changes, making their benefits closely tied to how the exchange rates are anticipated to move.

The Potential Benefits from Using Foreign Exchange Derivatives Are Independent