Which one of the following management techniques is likely to best offset the risk of long-run exposure to receivables denominated in a particular foreign currency?
A) borrow money in the foreign currency in question
B) lend money in the foreign currency in question
C) increase sales to that country
D) increase sales in this country

Question

Quizplus · Accepted Answer

Borrowing money in the foreign currency creates a natural hedge, as the liabilities in the foreign currency can offset the receivables, reducing the risk of currency fluctuations.

Which One of the Following Management Techniques Is Likely to Best