a) How can the risk of economic exposure can be mitigated? explain

b) Short term transactions exposure are often easily hedged and corrected shortly to smoothen the impact on cash-flow. Why?

c) Are you in favour of the following sentence? why yes or why not? Give examples of these instruments. There are variety of financial instruments available to hedge the risk of transaction exposure and these opportunities are grown tremendously in recent years.

d) Why in log-run the effect of hedging will be unfavorable to one side of the contract?

e) How can we identify economic exposures?

Answer rating: 100% (QA)

a Economic exposure refers to the risk faced by a company due to fluctuations in exchange rates which can impact its competitive position cash flows and overall financial performance To mitigate econo... View the full answer