Which of the following are commonly used by companies to manage foreign exchange risk?
A) Money market hedges
B) Foreign currency hedges
C) Internal hedges
D) All of the given choices

Question

Quizplus · Accepted Answer

Companies commonly use money market hedges, foreign currency hedges, and internal hedges to manage foreign exchange risk. Money market hedges involve using foreign currency-denominated securities that have a maturity matching the company's exposure. Foreign currency hedges involve using financial instruments like forward contracts, futures, and options to hedge foreign exchange risk. Internal hedges involve adjusting the company's internal operations to minimize foreign exchange risk, for example, by invoicing customers in the local currency and hedging translation exposure through centralizing accounting functions.

Which of the Following Are Commonly Used by Companies to Manage