___________ a certain currency exposure means establishing an offsetting currency position so that the gain or loss from the exposure on the original currency is exactly offset buy the gain or loss from the currency hedge.
A)Arbitraging
B)Cross-hedging
C)Hedging
D)Risk shifting

Question

Quizplus · Accepted Answer

Hedging a currency exposure involves establishing an offsetting currency position to offset the gain or loss from the exposure on the original currency. It is a risk management technique that helps to mitigate potential losses from currency fluctuations. Arbitraging involves exploiting price differences of the same asset in different markets, while cross-hedging involves hedging one asset with a similar but not identical asset. Risk shifting is the transfer of risk from one party to another through insurance or other financial arrangements.

___________ a Certain Currency Exposure Means Establishing an Offsetting Currency