Which of the following is the least effective way of hedging exposure in the long run?
A) long-term forward contract.
B) currency swap.
C) parallel loan.
D) money market hedge.

Question

Quizplus · Accepted Answer

Money market hedge is the least effective way of hedging exposure in the long run as it involves borrowing and lending in different currencies which may result in interest rate risk and does not offer long-term protection against currency fluctuations. Long-term forward contracts and currency swaps are better options for long-term hedging as they provide fixed exchange rates over an extended period of time. Parallel loans involve borrowing and lending in different currencies at the same time and can also provide long-term protection against currency fluctuations.

Which of the Following Is the Least Effective Way of Hedging