If you have a long position in a foreign currency,you can hedge with
A)a short position in an exchange-traded futures option.
B)a short position in a currency forward contract.
C)a short position in foreign currency warrants.
D)borrowing (not lending)in the domestic and foreign money markets.

Question

Quizplus · Accepted Answer

The best option for hedging a long position in a foreign currency is to take a short position in a currency forward contract. This allows the investor to lock in a specific exchange rate for a future date, mitigating the risk of exchange rate fluctuations. Exchange-traded futures options and foreign currency warrants may also be used, but forward contracts are generally preferred. Borrowing in domestic and foreign money markets is not a hedging strategy and does not directly address foreign currency risk.

If You Have a Long Position in a Foreign Currency,you