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What is the difference between currency hedging and strategic hedging?

A. Currency hedging reduces exposure to unfavorable foreign exchange movements; strategic hedging is risky in case of wrong bets on currency movements.
B. Strategic hedging involves in-house financial experts; currency hedging involves managers from different functional areas.
C. Currency hedging is a strategy for financial companies; strategic hedging is a strategy for nonfinancial companies.
D. Strategic hedging refers to geographically dispersing operations in multiple currency zones; currency hedging focuses on using forward contracts and swaps to contain risks.



Answer :

GinnyAnswer

Final answer:

Currency hedging involves financial transactions to control currency risk, while strategic hedging focuses on spreading operations across currency zones.


Explanation:

Currency hedging involves using financial transactions to protect against currency risk, ensuring a known outcome regardless of market fluctuations. On the other hand, strategic hedging refers to spreading operations across multiple currency zones to mitigate risks associated with varied currency movements.


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