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Assume that Duke Thompson Fine Foods Inc. has an FX operating exposure of -2.45 to...

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Question

Finance

Assume that Duke Thompson Fine Foods Inc. has an FX operating exposure of -2.45 to the Euro. Which of the following statements is true?

S1: CEO Duke could hedge this exposure with operational hedging by moving some of his operating costs into EUR.

S2: CEO Duke could hedge his exposure with FX pass through, assuming that the price elasticity of demand for his product is very small.

Group of answer choices

S1 is correct and S2 is false

Both statements are correct

Both statements are false

S2 is correct but S1 is false

Answer & Explanation Solved by verified expert
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