When a company receives a USD 10 million payment for export goods on the same day as it pays USD 10 million for imports,this is called a/an:
A) dynamic hedge.
B) passive hedge.
C) natural hedge.
D) inherent hedge.

Question

Quizplus · Accepted Answer

This is called a natural hedge, as the company's imports and exports are balancing each other out in terms of currency exchange rates, providing a natural hedge against currency fluctuations.

When a Company Receives a USD 10 Million Payment for Export