Hedging exchange rate exposure involves establishing an offsetting currency position such that the loss or gain of one currency position is offset by a corresponding gain or loss in some other currency.

Question

Quizplus · Accepted Answer

Hedging exchange rate exposure does involve establishing an offsetting currency position to reduce the risk of loss or gain in one currency being offset by a corresponding gain or loss in another currency.

Hedging Exchange Rate Exposure Involves Establishing an Offsetting Currency Position