Management has an incentive to hedge which of the following exposures?
A) operating exposure
B) transaction exposure
C) translation (accounting) exposure
D) All of the above
E) None of the above

Question

Quizplus · Accepted Answer

Management typically has an incentive to hedge all types of exposures - operating, transaction, and translation - to protect the company's financial performance and position from adverse changes in exchange rates. Operating exposure relates to the impact of currency fluctuations on future cash flows, transaction exposure concerns the effect on current receivables or payables, and translation exposure deals with the impact on reported assets and liabilities.

Management Has an Incentive to Hedge Which of the Following