The General Principle of Exchange-Rate Hedging Is To

question 44

Multiple Choice

The general principle of exchange-rate hedging is to:

• A) deposit the foreign funds in the local money market until needed.
• B) transact in the foreign money market where the obligation arises.
• C) enter into an offsetting obligation in the same foreign currency.
• D) enter into offsetting obligations in the futures and forwards markets.

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Definitions:

Concentration Strategy

A strategy in which a company focuses its resources on entering or expanding in a narrow market or industry segment.

Expansion

The process of increasing the size, scope, or scale of operations of a business or organization, often into new markets or areas.

Same Business Area

Describes businesses that operate within the same sector or industry, often sharing similar market characteristics or target customers.

Restructuring Strategy

A corporate management tactic involving significant organizational changes such as mergers, acquisitions, or downsizing to improve profitability and efficiency.