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CFA Level 1
Derivatives

Using Derivatives for Hedging Currency Risk

Easy Derivative Markets And Instruments Uses Of Derivatives

As an investment manager, you are considering various strategies to manage risk within your portfolio. You are particularly interested in understanding how derivatives can be effectively utilized. One of your clients is seeking to hedge against potential fluctuations in currency exchange rates because they have significant investments in foreign assets.

In the context of using derivatives for this purpose, which of the following statements best describes the primary use of derivatives in this scenario?

Hint

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