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A US Company Has Subsidiaries Whose Functional Currency Is Their Local

Question 5

Multiple Choice

A U.S. company has subsidiaries whose functional currency is their local currency. Assume the subsidiaries have a positive net asset position. Which investment hedges the U.S. company's currency risk from these subsidiaries?


A) Investments in equity securities in the subsidiaries' currency
B) Investments in debt securities in the subsidiaries' currency
C) Debt denominated in the subsidiaries' currency
D) Forward purchase in the subsidiaries' currency

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