When a buyer locks in an exchange rate and avoids the risk of currency fluctuations, it is called:
A) the spot market.
B) the gray market.
C) vertical purchasing.
D) hedging.
E) factoring.

Question

Quizplus · Accepted Answer

When a buyer locks in an exchange rate to avoid the risk of currency fluctuations, it is called hedging. Hedging is commonly used by businesses that engage in global trade to protect themselves from exchange rate fluctuations.

When a Buyer Locks in an Exchange Rate and Avoids