Which of the following actions could a company use to hedge balance sheet exposure?
A) Forward contract on foreign currency
B) Foreign currency option
C) Foreign currency borrowing
D) All of the above may be used to hedge balance sheet exposure.

Question

Quizplus · Accepted Answer

All of the above may be used to hedge balance sheet exposure. A company may choose to use a forward contract on foreign currency to lock in an exchange rate on a future transaction, a foreign currency option to protect against unfavorable exchange rate movements, or foreign currency borrowing to match assets and liabilities in the same currency and reduce exposure to currency fluctuations.

Which of the Following Actions Could a Company Use to Hedge