The basic hedging strategy involves
A)reducing hard currency assets and soft currency liabilities
B)increasing hard currency liabilities and soft currency assets
C)reducing soft currency assets and hard currency liabilities
D)converting soft currencies to hard currencies and lending hard currencies

Question

Quizplus · Accepted Answer

The basic hedging strategy involves reducing exposure to currency risk by reducing soft currency assets and hard currency liabilities. This can be achieved by converting soft currency assets to hard currency or by reducing hard currency liabilities. This strategy aims to minimize the impact of fluctuations in exchange rates on the company's financial position. Therefore, choice (C) is the best answer.

The Basic Hedging Strategy Involves