Which of the Following Statements Is False

question 50

Multiple Choice

Which of the following statements is false?

• A) The most common method firms use to reduce the risk that results from changes in exchange rates is to hedge the transaction using currency forward contracts.
• B) Fluctuating exchange rates cause a problem known as the importer-exporter dilemma for firms doing business in international markets.
• C) Exchange rate risk naturally arises whenever transacting parties use different currencies: both of the parties will be at risk if exchange rates fluctuate.
• D) Because the supply and demand for currencies varies with global economic conditions, exchange rates are volatile.

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