If you fear the dollar will rise against the French euro,with a resulting adverse change in the dollar value of the equity of your French subsidiary,you can hedge by
A)selling euros forward in the amount of net assets
B)buying euros forward in the amount of net assets
C)reducing the liabilities of the subsidiary
D)selling euros forward in the amount of total assets

Question

Quizplus · Accepted Answer

Selling euros forward in the amount of net assets is a hedge against the risk of the dollar rising against the euro. By locking in a future exchange rate, you protect the dollar value of your French subsidiary's equity from adverse currency movements.

If You Fear the Dollar Will Rise Against the French