Unlike exporters and licensors, who both face currency risk, managers of foreign investment portfolios are sheltered from the rise and fall of exchange rates.

Question

Quizplus · Accepted Answer

Managers of foreign investment portfolios are not completely sheltered from currency risk. The value of their holdings may appreciate or depreciate due to fluctuations in exchange rates. However, they may have ways to mitigate this risk through various hedging strategies.

Unlike Exporters and Licensors, Who Both Face Currency Risk, Managers