Which of the following refers to exposure netting? 1. It is a strategy based on adjustments of the times of payments that are made in foreign currencies. 2. It is a practice which implies using swap contracts that have a fixed currency exchange rate. 3. It is a method of hedging transaction risk by offsetting exposure in one currency with exposure in the same or another similar currency. 4. It is a strategy that involves using two distinct assets with positively correlated price movements where the investor takes opposing positions in each investment in an attempt to reduce the risk of holding just one of the securities.
Which of the following refers to exposure netting? 1. It is a strategy based on adjustments of the times of payments that are made in foreign currencies. 2. It is a practice which implies using swap contracts that have a fixed currency exchange rate. 3. It is a method of hedging transaction risk by offsetting exposure in one currency with exposure in the same or another similar currency. 4. It is a strategy that involves using two distinct assets with positively correlated price movements where the investor takes opposing positions in each investment in an attempt to reduce the risk of holding just one of the securities.
Chapter11: Managing Transaction Exposure
Section: Chapter Questions
Problem 3BIC
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Which of the following refers to exposure netting?
1. It is a strategy based on adjustments of the times of payments that are made in foreign currencies.
2. It is a practice which implies using swap contracts that have a fixed currency exchange rate.
3. It is a method of hedging transaction risk by offsetting exposure in one currency with exposure in the same or another similar currency.
4. It is a strategy that involves using two distinct assets with positively correlated price movements where the investor takes opposing positions in each investment in an attempt to reduce the risk of holding just one of the securities.
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