Which of the Following Statements Is FALSE

Multiple Choice

Which of the following statements is FALSE?

A) The most common method firms use to reduce the risk that results from changes in exchange rates is to hedge the transaction using currency forward contracts.
B) Fluctuating exchanges rates cause a problem known as the importer-exporter dilemma for firms doing business in international markets.
C) Exchange rate risk naturally arises whenever transacting parties use different currencies: Both of the parties will be at risk if exchange rates fluctuate.
D) Because the supply and demand for currencies varies with global economic conditions,exchange rates are volatile.