A manager arguing against currency hedging would most likely argue that _____.
A) currency hedging eats into company profits
B) currency hedging leaves firms at the mercy of the spot market
C) currency hedging decreases stability of cash flows and earnings
D) currency hedging is mainly a practice of very large MNEs

Question

A manager arguing against currency hedging would most likely argue that _____.
A) currency hedging eats into company profits 
B) currency hedging leaves firms at the mercy of the spot market 
C) currency hedging decreases stability of cash flows and earnings 
D) currency hedging is mainly a practice of very large MNEs

Quizplus · Accepted Answer

Currency hedging can indeed eat into company profits due to the costs associated with implementing hedging strategies, such as transaction costs and the potential opportunity cost of missing favorable currency movements.

A Manager Arguing Against Currency Hedging Would Most Likely Argue