If Americans buy British securities,they may hedge the foreign exchange risk by entering into futures contracts to sell pounds at a specified price.

Question

Quizplus · Accepted Answer

Hedging foreign exchange risk by entering into futures contracts to sell pounds at a specified price is a commonly used strategy by investors buying British securities. This enables them to mitigate the risk of currency fluctuations impacting their returns.

If Americans Buy British Securities,they May Hedge the Foreign Exchange