Which of the Following Statements Regarding Hedging with Currency Forwards

question 29

Multiple Choice

Which of the following statements regarding hedging with currency forwards is true?

• A)Currency forwards can be used to eliminate the volatility of earnings from foreign operations.
• B)Currency forward contracts serve to reduce the cash flow volatility associated with a project.
• C)If possible, it is to a firm's benefit to hedge their exchange rate risk exposure completely.
• D)Both A and B are true statements.

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