Question: Suppose you are an investor based in Japan. You have invested in the common stocks of publicly listed firms in several countries. You plan to

Suppose you are an investor based in Japan. You have invested in the common stocks of publicly listed firms in several countries. You plan to liquidate your holdings of the equity investments in France and the US about 12 months from now. The market value of your equity investment in France is EUR15,000,000 while the current market value of your equity investment in the US is $10,000,000. Historically, the exchange rates between the Japanese yen against the EUR and the USD vary quite a lot at times.

Would you expect the exchange rates to be volatile in the future?

How do you intend to manage the exchange rate risk?

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