Ways of managing transaction and translation exposures include buying forward,using foreign exchange and natural hedges,such as:
A)open-convertibility in currency transactions.
B)leading and lagging payables and receivables.
C)a receipt,a contract and a document of title.
D)restricting residents or non-residents from converting currency into a foreign currency.

Question

Quizplus · Accepted Answer

Leading and lagging payables and receivables involve adjusting the timing of payments and receipts in order to mitigate the effects of exchange rate fluctuations. By paying or receiving earlier or later than originally planned, a company can potentially avoid losses due to adverse currency movements. This technique can be especially useful for companies that have limited access to forward contracts or other hedging instruments. Options A, C, and D are not relevant to the management of transaction and translation exposure.

Ways of Managing Transaction and Translation Exposures Include Buying Forward,using