Using currency derivatives to reduce potential transaction,translation,and economic risks of currency movements that could lead to losses for a firm or investor is called_____.

Question

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Hedging involves using financial instruments, such as currency derivatives, to mitigate against potential losses from currency movements. Speculating involves taking on risks in the hopes of making a profit, while short positions, organized exchange positions, and marked-to-market positions are specific types of financial positions that do not necessarily involve hedging against currency risks.

Using Currency Derivatives to Reduce Potential Transaction,translation,and Economic Risks of Currency