True, since the results of both a money market hedge and a forward hedge are known beforehand, an MNC can implement the one that is more feasible.
Because the outcomes of both a money market hedge and a forward hedge are known in advance, an MNC can choose the one that is more feasible. When interest rates are equal, the forward hedge always outperforms the money market hedge.
Money market hedge- A money market hedge is a strategy for locking in the value of a foreign currency transaction in a company's home currency.
Forward hedge- A forward contract is used to hedge the risk of foreign exchange for future settlement.
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