Which of the below statements is NOT true: A. The objective of currency hedging is to...
Which of the below statements is NOT true:
A. The objective of currency hedging is to eliminate the change in the value of the exposed asset or cash flow from a change in exchange rates.
B. Hedging is accomplished by combining the exposed asset with a hedge asset to create a two asset portfolio in which the two assets react in relatively equal directions to an exchange rate change.
C. With the use of forwards, a perfect hedge is possible.
D. a & b
Homework Answers
Option D. a & b
As both the below statements are false
A. The objective of currency hedging is to eliminate the change in the value of the exposed asset or cash flow from a change in exchange rates.
B. Hedging is accomplished by combining the exposed asset with a hedge asset to create a two asset portfolio in which the two assets react in relatively equal directions to an exchange rate change.
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