Remaining Unhedged Is NOT an Option When Dealing with Foreign

question 13

True/False

Remaining unhedged is NOT an option when dealing with foreign exchange transaction exposure.

---

Definitions:

Hedge Transaction

A financial agreement or trade designed to reduce or eliminate the risk of future price fluctuations.

Forward Rate

A future exchange rate negotiated today, locking in the price at which a currency transaction will occur at a specified future date.

Forward Contract

A contractual agreement to buy or sell a particular commodity or financial instrument at a predetermined price at a specified time in the future.

Partial Trial Balance

A component of a trial balance that includes selected accounts or transactions, often used for analyzing or adjusting specific financial information.