Which of the following is the least effective way of hedging exposure in the long run?
A) long-term forward contract.
B) currency swap.
C) parallel loan.
D) money market hedge.

Question

Quizplus · Accepted Answer

Money market hedge is considered the least effective way of hedging exposure in the long run as it involves borrowing and lending in foreign currencies with the hope of offsetting exchange rate risks. It is a short-term solution that can be costly and complicated, and it may not provide adequate protection against long-term currency fluctuations. A long-term forward contract or a currency swap would be a better choice for hedging exposure over an extended period. A parallel loan can also provide some long-term protection by matching foreign currency debt and asset cash flows.

Which of the Following Is the Least Effective Way of Hedging