Discuss the difference between transactions exposure and economic exposure to exchange rate changes.  Radetskiy Inc. has €10,000,000 of receivables due in 60 days.  The spot rate on Euros is $1.08 the 60-day forward rate is $1.09.

Should Radetskiy hedge their receivables?  Why, or why not?  Discuss the differences between hedging with a Forward contract and hedging with a money market hedge.  Which one is best?  Why?

Answer rating: 100% (QA)

Transaction exposure and economic exposure are two types of exchange rate risk that businesses can face Transaction exposure This refers to the risk o... View the full answer