From the perspective of a corporate CFO, when hedging a payable versus a receivable
A)credit risk considerations are more germane for a payable.
B)credit risk considerations are more germane for a receivable.
C)none of the above

Question

Quizplus · Accepted Answer

When hedging a payable, the main concern is typically interest rate risk and fluctuations in the currency exchange rate. However, when hedging a receivable, credit risk is a more relevant consideration since the company is exposed to the risk that the counterparty may default on the payment. Therefore, credit risk considerations are more germane for a receivable.

From the Perspective of a Corporate CFO, When Hedging a Payable