alleryStart learning →Natural hedging works by doing what?
ARaising the selling price abroad
BBuying call options for cover
CNetting foreign exchange exposures
DDelaying every single payment
Answer & Solution
Correct answer: C. Netting foreign exchange exposures
Natural hedging offsets inflows against outflows in the same currency, which also cuts the bank margin on conversions.
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Related questions
Balance-sheet hedging aims for net translation exposure of what?The temporal method translates specific items consistent with what?Under the current-rate method, statement items use which rate?Transaction risk arises from which foreign-denominated items?Translation risk concerns exchange-rate effects on what?