Question

TOPNEWS DOM KNOWLEDGE CHECK You buy some U.S. government bonds. You are a euro-based portfolio manager and you have invested in the technology sector of the U.S. stock market. You want to keep your exposure to tech stocks but are worried about an impending financial crisis in the United States. What is the best way to manage your dollar currency risk? You enter into a EUR/USD forward contract. You sell most of your U.S. tech holdings. You buy gold. e Bombery Makat LP Launchpad Credit 4-.OOMBERS -BLOOMBERG 2-BLOOMBERG Duchen Suchen BLOOMBERG

Answer 1

Correct Answer :-You enter into Euro/USD forward contract.

Explanation:

By opting for Euro/USD forward contract an Euro based portfolio manager secure its portfolio position from financial crisis tend to be occurred in USA. Currency hedging by doing future currency contracts of foreign country is most usual and effective hedging of stocks or portfolio.

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