It is possible for a firm to purchase complete insurance against the risks that arise from changes in exchange rates in the foreign exchange market.

Question

Quizplus · Accepted Answer

It is not possible for a firm to completely eliminate the risks arising from changes in exchange rates through insurance. While some forms of insurance such as hedging can mitigate the risks, there is always some degree of uncertainty and variability in exchange rates that cannot be fully eliminated.

It Is Possible for a Firm to Purchase Complete Insurance