Most MNCs:
A)are large companies but do not engage in hedging.
B)are large companies and engage in hedging.
C)are not large companies but do engage in hedging.
D)are not large companies and do not engage in hedging.

Question

Quizplus · Accepted Answer

Most MNCs are large companies and engage in hedging to manage their foreign exchange risks. Hedging involves using financial instruments such as forward contracts, options, and swaps to protect against adverse movements in exchange rates. MNCs use hedging to reduce their exposure to currency fluctuations and to ensure that their cash flows are not adversely impacted by changes in exchange rates.