Question: ABC Ltd. is a multinational company engaged in complex financial transactions across various countries. The company has significant foreign currency exposures and frequently enters into forward contracts to hedge against foreign exchange risks. During the current financial year, the company reported a significant loss due to unfavorable foreign exchange rate movements. To address the foreign exchange risk and enhance its risk management strategies, which of the following financial instruments should ABC Ltd. consider using? A) Swaps B) Options C) Futures D) Collateralized Debt Obligations (CDOs) E) Credit Default Swaps (CDSs)
Question: ABC Ltd. is a multinational company engaged in complex financial transactions across various countries. The company has significant foreign currency exposures and frequently enters into forward contracts to hedge against foreign exchange risks. During the current financial year, the company reported a significant loss due to unfavorable foreign exchange rate movements. To address the foreign exchange risk and enhance its risk management strategies, which of the following financial instruments should ABC Ltd. consider using? A) Swaps B) Options C) Futures D) Collateralized Debt Obligations (CDOs) E) Credit Default Swaps (CDSs)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question:
ABC Ltd. is a multinational company engaged in complex financial transactions across various countries. The company has significant foreign currency exposures and frequently enters into forward contracts to hedge against foreign exchange risks. During the current financial year, the company reported a significant loss due to unfavorable foreign exchange rate movements.
To address the foreign exchange risk and enhance its risk management strategies, which of the following financial instruments should ABC Ltd. consider using?
A) Swaps
B) Options
C) Futures
D) Collateralized Debt Obligations (CDOs)
E) Credit Default Swaps (CDSs)
Which is correct option give answer also mention why another is wrong
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