A financial strategy that reduces the chance of suffering losses arising from foreign exchange risk is referred to as

Question

Quizplus · Accepted Answer

Hedging refers to the use of financial instruments or strategies to offset potential losses from fluctuations in foreign exchange rates. By using hedging techniques such as currency options, futures contracts, or forward contracts, businesses can protect themselves against unfavorable currency movements and reduce the risk of financial losses. Foreign exchange leverage, conversion depletion, and transaction mitigation are not commonly used terms in the context of managing foreign exchange risk.

A Financial Strategy That Reduces the Chance of Suffering Losses