Hedging is used to
A)reduce risks associated with holding receivables denominated in foreign currencies.
B)calculate the current ratio for multinational companies.
C)translate foreign currency into U.S.dollars.
D)'window dress' uncollectible accounts.

Question

Quizplus · Accepted Answer

Hedging is a risk management strategy used to reduce the risks associated with holding assets or liabilities denominated in foreign currencies. By hedging, companies can protect themselves against fluctuations in exchange rates that could result in losses. So, the best choice is A. The other options are incorrect as they do not relate to hedging.

Hedging Is Used to