Management of transaction, economic and translation exposure
3 important questions on Management of transaction, economic and translation exposure
Read the money market instruments part on page 382 on the choices to forward hedge or money market hedge.
Read it.
Read the part about currency options contracts on page 383
Read it.
What is the main technique to minimize translation exposure?
Balance sheet hedge.
› A balance sheet hedge requires an equal amount of exposed foreign currency assets and liabilities on a firm’s consolidated balance sheet.
› If this can be achieved for each foreign currency, net translation exposure will be zero (powerpoint lecture 6).
› A balance sheet hedge requires an equal amount of exposed foreign currency assets and liabilities on a firm’s consolidated balance sheet.
› If this can be achieved for each foreign currency, net translation exposure will be zero (powerpoint lecture 6).
The question on the page originate from the summary of the following study material:
- A unique study and practice tool
- Never study anything twice again
- Get the grades you hope for
- 100% sure, 100% understanding
Remember faster, study better. Scientifically proven.
