Hedging Euro Revenue Risk for ABC Corporation

Easy Currency Management Currency Hedging

ABC Corporation is a U.S.-based company that exports goods to Europe. Due to the current exchange rate fluctuations, ABC Corporation is concerned about the potential depreciating value of the Euro against the U.S. Dollar. To mitigate this risk, the CFO is considering using a currency hedging strategy.

Which of the following hedging strategies would best help ABC Corporation protect its revenues when receiving Euro payments?

Enter into a currency forward contract to sell Euros and buy U.S. Dollars.

Acquire Euro options to purchase Euros at a later date.

Increase the prices of goods sold in Europe to offset potential losses.

Hint

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% Correct91%