Hedging to address mitigation of transaction exposure primarily focuses on:
A)risk management.
B)payables and receivables.
C)research and development costs.
D)taxable income.

Question

Quizplus · Accepted Answer

Hedging to address transaction exposure primarily focuses on managing the risk associated with payables and receivables in foreign currencies. It involves taking measures to protect against significant fluctuations in the exchange rate between the time a transaction is initiated and the time it is completed. This can involve the use of financial instruments such as forward contracts, options, and futures. Hedging can help mitigate the potential negative impact of exchange rate movements on the company's cash flows and financial performance. Hedging is a form of risk management that helps companies to protect their financial position and maintain stability in their operations. Research and development costs and taxable income are not directly related to hedging transaction exposure.

Hedging to Address Mitigation of Transaction Exposure Primarily Focuses On