GENERAL KNOWLEDGE

GK

ACCOUNTING

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
Foreign Currency Exchange Rate risk can be hedged in
A
Money Market
B
Futures Market
C
Options Market
D
All of the above
Explanation: 

Detailed explanation-1: -The two most common methods to hedge foreign currency exposure are forward contracts and currency options. Forward contracts and options are a form of derivatives, namely over-the-counter derivatives, meaning that they are not traded on centralized markets but rather privately negotiated between two counterparts.

Detailed explanation-2: -Exchange rate risk refers to the risk that a company’s operations and profitability may be affected by changes in the exchange rates between currencies. Companies are exposed to three types of risk caused by currency volatility: transaction exposure, translation exposure, and economic or operating exposure.

There is 1 question to complete.