Foreign currency exposures can be avoided by

A. Entering into forward contracts

B. Denominating the transaction in domestic currency

C. Exposure netting

D. Maintaining foreign currency accounts

Answer: Option B

Solution(By Examveda Team)

Foreign currency exposures can be avoided by denominating the transaction in domestic currency. Foreign Exchange Exposure refers to the risk associated with the foreign exchange rates that change frequently and can have an adverse effect on the financial transactions denominated in some foreign currency rather than the domestic currency of the company.