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Which of the following explanations can get rid of a spectacular from foreign exchange risk...

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Finance

  1. Which of the following explanations can get rid of a spectacular from foreign exchange risk (FER)? (1 Mark)
  1. If international parity conditions hold, then FER will not arise.
  2. If it is possible to forecast exchange rates accurately, then FER can be controlled.
  3. Spectaculars are naturally hedged through diversification, implying that there is no need to indulge in costly hedging operations.

All of the above reasons

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