Multiple Choice
Assume a U.S. firm uses a forward contract to hedge all of its translation exposure. Also assume that the firm underestimated what its foreign earnings would be. Assume that the foreign currency depreciated over the year. The firm would generate a translation ____, which would be ____ than the gain generated by the forward contract.
A) loss; smaller
B) loss; larger
C) gain; larger
D) gain; smaller
Correct Answer:
Verified
Correct Answer:
Verified
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