Because of the long-term implications of volatile exchange rates,firms should:

Question

Quizplus · Accepted Answer

Pursuing strategies that reduce economic exposure is the most effective way for firms to manage the long-term implications of volatile exchange rates. The other options are not practical or feasible. The forward market is not a perfect predictor of future exchange rates, and insurance coverage for several years in the future is unlikely to be available. Avoiding foreign currency transactions would limit the firm's ability to engage in international trade and could result in lost opportunities.

Because of the Long-Term Implications of Volatile Exchange Rates,firms Should