Question

Which term defines using currency derivatives to reduce potential currency risks due to currency exchange rate movement that could lead to losses for a firm?Which term defines using currency derivatives to reduce potential currency risks due to currency exchange rate movement that could lead to losses for a firm?Which term defines using currency derivatives to reduce potential currency risks due to currency exchange rate movement that could lead to losses for a firm?

Answer 1

Hedging

Step-by-step explanation:

The term that defines using currency derivatives to reduce potential currency risks due to currency exchange rate movement that could lead to losses for a firm is known as Hedging. Hedging is a financial strategy in which an equal and opposite position is undertaken in the financial portfolio which offsets the risk and prevent loss from any adverse movement in the price of the underlying assets.