Which one of the following is the suggested method of handling exchange rate risk for a large, multinational firm headquartered in the U.S.? Assume the operations in each country represent a different division of the firm.

Question

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The best approach to handling exchange rate risk for a large, multinational firm headquartered in the U.S. is to adopt a centralized approach that includes all divisions. This approach would allow the firm to take advantage of its size and scale, as well as its ability to access sophisticated financial instruments and expertise. Such a centralized approach would also enable the firm to pool its foreign currency exposure, reducing the impact of individual exposures and facilitating the use of hedging strategies.

Which One of the Following Is the Suggested Method of Handling