Which of the following is a reason why most firms do not hedge economic risk?
A) Among the translation risk,transaction risk and economic risk; economic risk has the least influence on the total currency risk of a firm.
B) It is costly to hedge against the economic risk and also highly ineffective.
C) Whenever exchange rates change for real reasons other than purely monetary reasons,it is difficult to implement effective hedges.
D) It is difficult to estimate both the current and the long-term effects of exchange rate changes on the firm's cash flows.
Correct Answer:
Verified
Q1: Which of the following is true of
Q2: Assume that a UK enterprise has a
Q3: Which of the following is a managerial
Q4: Which of the following is true of
Q5: Explain a firm's hedging exposure to credit
Q7: Which of the following is an example
Q8: A UK based firm that has business
Q9: Which of the following is an advantage
Q10: Which of the following is true of
Q11: Which of the following is a determinant
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents