Hedging a position exposed to exchange-rate risk is the act of reducing or eliminating a net asset or net liability position in the foreign currency.
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Speculating in a position exposed to exchange-rate risk is the act of reducing or eliminating a net asset or net liability position in the foreign currency.
A. 对
B. 错
An unhedged international investment has a speculative element to it, and it is called a covered international investment.
A. 对
B. 错
Uncovered interest arbitrage is buying a country's currency spot and selling that country's currency forward, to make a net profit from the combination of the difference in interest rates between countries and the forward premium on the country's currency.
A. 对
B. 错
If a currency is at a forward premium by as much as its interest rate is lower than the interest rate in the other country, covered interest parity holds.
A. 对
B. 错