Generally speaking,
A)it is not possible to hedge both translation exposure and transaction exposure simultaneously.
B)if a firm can hedge translation exposure then transaction exposure will be simultaneously hedged.
C)if a firm can hedge transaction exposure then translation exposure will be simultaneously hedged.
D)none of the options

Question

Quizplus · Accepted Answer

Translation exposure and transaction exposure are two different types of foreign exchange risk. Translation exposure arises from the need to translate foreign currency financial statements into the reporting currency. Transaction exposure arises from the risk that the value of a foreign currency transaction will change before the transaction is settled. It is possible to hedge one type of exposure without hedging the other.

Generally Speaking