If the underlying transaction gives you a liability,denominated in foreign currency,the general principal behind a money market hedge states you need an equivalent ________ in the money market to provide a hedge.

Question

Quizplus · Accepted Answer

To provide a hedge for a liability denominated in a foreign currency using a money market hedge, an equivalent asset in the money market is needed. This asset should have a value that moves in the opposite direction to the liability, thereby offsetting any losses that may arise due to the currency exchange rate fluctuations. The other options (A, C, and D) are not relevant to the money market hedge approach to hedging foreign currency liabilities.

If the Underlying Transaction Gives You a Liability,denominated in Foreign