A firm exposed to exchange rate risk can hedge its risk by

Question

Quizplus · Accepted Answer

Using the forward exchange market, borrowing in international money markets, and utilizing foreign currency futures markets are all effective ways for a firm to hedge its exchange rate risk. Each of these methods allows the firm to lock in a specific exchange rate, reducing the uncertainty and potential losses associated with fluctuating exchange rates. Therefore, the best choice is D - All of these options are true.

A Firm Exposed to Exchange Rate Risk Can Hedge Its