Principles of Macroeconomics / Unit 13 MAC 1209 short lesson, about 20 seconds
Hedging
Captions available
The idea
A firm expecting a foreign payment can lock in today's rate for a future date using a financial contract, paying a fee for it. That is hedging, and it removes exchange rate risk from the transaction.
In practice
The fee buys certainty, not a better rate.
Where people slip
The course describes hedging and recommends nothing.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
Builds on
Unlocks
- Nothing yet depends on this.
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