In international trade, companies use hedging to protect themselves from the effects of fluctuations in the:

Question

Quizplus · Accepted Answer

Hedging is used to protect against fluctuations in foreign-currency exchange rates. By using financial instruments such as futures or options contracts, companies can lock in a specific exchange rate and reduce their exposure to currency risk. Hedging against demand fluctuations or invoice prices would require different strategies, while interest rate fluctuations are generally more relevant to domestic rather than international trade.

In International Trade, Companies Use Hedging to Protect Themselves from the Effects