Question
Which of the following statement is FALSE ? If you owe a foreign currency denominated debt, you can hedge with buying the foreign currency today
Which of the following statement is FALSE?
If you owe a foreign currency denominated debt, you can hedge with buying the foreign currency today and investing it in the foreign county.
The choice between a forward market hedge and a money market hedge often comes down to fisher effect.
Buying a currency option limits the downside risk while preserving the upside potential.
The most direct and popular way of hedging transaction exposure is by currency forward contracts.
Question
Which of the following statement is FALSE?
The most direct and popular way of hedging transaction exposure is by currency future contracts.
If you own a foreign currency denominated bond, you can hedge with a swap contract where pay the cash flows of the bond in exchange for dollars.
If you owe a foreign currency denominated debt, you can hedge with buying the foreign currency today and investing it in the foreign county.
The choice between a forward market hedge and a money market hedge often comes down to interest rate parity.
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