Which of the following is a non-derivative hedging instrument?
A) Forward contract on foreign currency
B) Foreign currency call option
C) Foreign currency borrowing
D) Foreign currency put option

Question

Quizplus · Accepted Answer

A foreign currency borrowing is a non-derivative hedging instrument. It involves borrowing in a foreign currency to offset exposure to that currency, rather than using derivatives such as forward contracts or options. A forward contract and options (both call and put) are all derivative hedging instruments.

Which of the Following Is a Non-Derivative Hedging Instrument