One argument that favors centralization of foreign risk management is the ability to take advantage of the portfolio effect through ________.
A)risk shifting
B)risk sharing
C)offshore banking
D)exposure netting

Question

Quizplus · Accepted Answer

Exposure netting allows an organization to offset exposures in one currency with exposures in another, taking advantage of the portfolio effect to reduce overall risk. This is a key benefit of centralizing foreign risk management.

One Argument That Favors Centralization of Foreign Risk Management Is