A large pension fund is considering your money management firm as a candidate to manage the international portion of its overall portfolio of securities. The international component currently stands at $100 million. As part of its due diligence process, the potential client has requested that your firm fully delineate and deliver in writing the processes you use to narrow your universe of opportunities that ultimately lead to your securities selections.

In two pages discuss currency risk and how you will protect a client’s portfolio against currency risks. Create and discuss at least one original and specific example of a currency risk and what you would do to protect the portfolio against this risk.