Recent surveys of corporate exchange risk management practices point out that many U.S. firms simply do not hedge. How would you explain this result?

Answer:  There can be several achievable reasons for this. First, several firms may feel that they are not actually exposed to exchange risk due to product diversification, diversified markets for their products, etc. Second, firms may be by using self-insurance against exchange risk. Third, firms might feel that shareholders can diversify exchange risk themselves, rendering corporate risk management not necessary.