Geographically Diversified Operations Provide a Natural Hedge of Transaction Exposure

Multiple Choice

Geographically diversified operations provide a natural hedge of transaction exposure to currency risk because ______.

A) operating costs in one country are unlikely to be related to costs in another country
B) it is easy to replace sales in one country with sales from another country
C) when one currency is depreciating, another currency must be appreciating
D) Two of the above
E) None of the above