differences between translation risk and transaction risk

Q: What is meant by Foreign Exchange Markets?

A:

Q: Give recommendations on how to reduce exchange rate exposure.

A: Exchange rate risk, often known as foreign exchange (forex) risk, is an inevitable risk of…

Q: What are forward contracts? How can they beused to manage foreign exchange risk?

A: Risk refers to the uncertainty regarding the implications of any activity.

Q: What causes balance sheet (or translation) exposure to foreign exchange risk? How does balance sheet…

A:

Q: Which of the following is the risk due to exchange rates?      Business risk     Financial risk…

A: The investments that we make in debt, equity and other financial securities are exposed to different…

Q: Does Arbitrage destabilize foreign exchange markets? Support your logic about that statement

A: Solution- F = S*1+if/1+id  F= Forward Exchange Rate  S= Current Spot Exchange Rate  Id= Interest…

Q: What are the criteria for selecting between hedging or diversification to manage risk in the foreign…

A: Hedging This is  said to be the risk management strategy which is used by  individuals and companies…

Q: Define foreign currency hedges.

A: Definition:   Hedge: The process through which the risk associated with a particular project, can be…

Q: Foreign Currency Risk Mitigation Strategies

A: Foreign currency risk refers to the potential loss that a business may face due to fluctuations in…

Q: What is exchange risk, as distinct from exposure?

A: Foreign exchange risk or foreign exchange exposure refers to the financial risk associated with a…

Q: What is cross-exchange rate? Give an example.

A: The exchange rate expresses the value of a currency in terms of another currency. It determines the…

Q: Critically evaluate the role of exchange rate systems in influencing FDI and trade levels.

A: Foreign direct investment:  One of the primary methods of contemporary capital internationalization,…

Q: How do you determine and calculate return and risk on foreign exchange transactions

A: Foreign exchange transactions are those transactions which are undertaken between citizens of one…

Q: What is the importance of Foreign Exchange Market?

A: Foreign exchange markets commonly known as Forex markets are mainly concerned with purchasing and…

Q: ith practical example ?

A: Currency risk, also called foreign-exchange risk or exchange-rate risk, is the risk that changes in…

Q: Discuss the following types of currency risks giving suitable examples: i. Economic risk ii.…

A: EXPLANATION:- Currency Risk Currency ratio is a measurement of loosing money as a result of…

Q: Explain the need for and problems associated with forecasting foreign  exchange rate

A: An exchange rate forecast indicates the expectation about future value of exchange rates at a future…