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CFA Level 3
Derivatives & Currency Mgmt

Purpose of Currency Hedging

Very Easy Currency Management Currency Hedging

As a portfolio manager at an international investment firm, you are concerned about the fluctuations in exchange rates that could impact your portfolio's returns. You are considering using currency hedging strategies to mitigate this risk. Currency hedging involves using derivatives such as forwards, futures, or options to protect against adverse currency movements.

Which of the following best describes the purpose of currency hedging?

Hint

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