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What is the difference between currency hedging and strategic hedging?

A. Currency hedging reduces exposure to unfavorable foreign exchange movements; strategic hedging is risky in case of wrong bets on currency movements.
B. Strategic hedging involves in-house financial experts; currency hedging involves managers from different functional areas.
C. Currency hedging is a strategy for financial companies; strategic hedging is a strategy for nonfinancial companies.
D. Strategic hedging refers to geographically dispersing operations in multiple currency zones; currency hedging focuses on using forward contracts and swaps to contain risks.

Sagot :

GinnyAnswer

Final answer:

Currency hedging involves financial transactions to control currency risk, while strategic hedging focuses on spreading operations across currency zones.


Explanation:

Currency hedging involves using financial transactions to protect against currency risk, ensuring a known outcome regardless of market fluctuations. On the other hand, strategic hedging refers to spreading operations across multiple currency zones to mitigate risks associated with varied currency movements.


Learn more about Currency and strategic hedging here:

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