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When managing foreign exchange risk, financial institutions may use on-balance sheet hedging or hedging with forwards and futures. Explain how these two different types of

When managing foreign exchange risk, financial institutions may use on-balance sheet hedging or hedging with forwards and futures. Explain how these two different types of hedging help financial institutions minimize their exposure to foreign exchange risk. Be sure to indicate how the different types of hedging affect the financial institutions balance sheet. Provide examples of these different forms of hedging as used by a financial institution.

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