Question

Jacob is the chief financial officer for RinseAll Detergent products. His company is interested in investing in a facility in Indonesia, but he is worried about unpredictable fluctuations in future exchange rates, which could cost his company millions of dollars. One way to ensure against this exchange risk is for Jacob to use ____

Answer 1

Answer:

The correct answer is Hedging.

Explanation:

Hedging is the strategy used to reduce risks in investment. When hedging is used, it is when the investor, in addition to making his initial investment, also invests in a related product in a manner contrary to the one he will invest.

Hedging is widely used in investments because it is an accurate way to be able to secure its economy, this method is widely used today, and it also offers the advantage of making your coverage differently, whether in currencies, stocks, among others.

I hope this information can help you.