A corporation that uses a strategy of hedging all contracts specifying a foreign currency (i.e.foreign accounts receivable and foreign accounts payable):

Question

Quizplus · Accepted Answer

By hedging all contracts specifying a foreign currency, the corporation is able to avoid net losses from fluctuations in foreign exchange rates. The hedging strategy involves taking positions in the market that offset potential losses, thereby protecting the corporation from adverse movements in currency rates. While this strategy may not always result in gains, it does provide a level of certainty and stability in the face of currency risks.

A Corporation That Uses a Strategy of Hedging All Contracts