Since forward contracts are easy to use for hedging, any exposure to exchange rate movements should be hedged.

Question

Quizplus · Accepted Answer

Forward contracts may not always be the most cost-effective method of hedging, and hedging every exposure to exchange rate movements may not be necessary or desirable for a company's risk management strategy. Factors such as the size and duration of the exposure, market volatility, and the availability of hedging instruments should be considered before deciding to hedge.

Since Forward Contracts Are Easy to Use for Hedging, Any