Market-based hedging techniques for FX include:
A) futures contracts.
B) options on foreign currency.
C) currency swaps.
D) all of the given choices.

Question

Quizplus · Accepted Answer

All three given choices are market-based hedging techniques for FX. Futures contracts and options on foreign currency are both derivative instruments that traders can use to mitigate their FX risk. Currency swaps, on the other hand, are agreements between two parties to exchange currencies at a specified rate on a specified date in the future. By using a currency swap, traders can effectively lock in an exchange rate and reduce their exposure to currency risk. Therefore, all three options are viable choices for market-based hedging techniques for FX.

Market-Based Hedging Techniques for FX Include