Question

....... is a specific way of exposure netting.It involves a firm buying the raw material in the same currency in which it sells its products?

• A. Sourcing
• B. Set-off
• C. Set-in
• D. None of the above

Answer 1

The correct option is A Sourcing

Exposure netting is a method of hedging currency risk by offsetting exposure in one currency with exposure in the same or another similar currency. Exposure netting has the objective of reducing a company's exposure to exchange rate (currency) risk. When trading in the Hedging mode, you can open multiple positions, both long and short, with the same instrument. Netting is the consolidation of the values of two or more positions in order to create a single value.