A balance sheet hedge is the main technique for managing
A) transaction.
B) operating.
C) translation.
D) money market.

Question

Quizplus · Accepted Answer

A balance sheet hedge is used to manage risks related to accounting translation. This technique helps to protect the value of a company's assets and liabilities against changes in currency exchange rates. It involves using financial instruments, such as forwards, options, and swaps, to offset the impact of currency fluctuations on the balance sheet. Balance sheet hedging is particularly important for multinational companies that operate in multiple countries and report financial statements in different currencies.

A Balance Sheet Hedge Is the Main Technique for Managing