Which of the following is commonly used to minimize transaction exposure in foreign exchange dealings?

Question

Quizplus · Accepted Answer

Hedging in the money market is commonly used to minimize transaction exposure in foreign exchange dealings. In this market, companies can use financial instruments such as forward contracts, futures, and options to lock in a specific exchange rate for a future transaction. This can help protect against fluctuations in exchange rates, reducing the risk and uncertainty of foreign currency transactions. Hedging in the interest swap market primarily addresses interest rate risk, while hedging in the stock market and treasury bills market are not commonly used for foreign exchange risk management.

Which of the Following Is Commonly Used to Minimize Transaction