A balance sheet hedge seeks to
A)eliminate any mismatch of net assets and net liabilities denominated in the same currency.
B)transfer accounting exposure to transaction exposure.
C)create cumulative translation adjustment.
D)none of the above

Question

Quizplus · Accepted Answer

A balance sheet hedge seeks to eliminate any mismatch of net assets and net liabilities denominated in the same currency. This is done to reduce the risk of currency fluctuations impacting the balance sheet and to maintain a stable financial position. Transfer of accounting exposure to transaction exposure and creating cumulative translation adjustment are not the objectives of a balance sheet hedge.

A Balance Sheet Hedge Seeks to