Strategies Towards Exchange Risk
The statements of corporate managers and financial executives suggest a variety of strategies towards exchange risk. A strategy is a systematic approach indicating when an exposure in a foreign currency should be maintained, and when it should be increased or reduced. The elements in a strategy include the anticipated costs of altering exposure by transactions effected currently and at various future dates, and the firm’s attitudes towards the uncertainty about impacts of changes in exchange rates and changes in exchange controls on its income, net worth, and market value.
KeywordsExchange Rate Interest Rate Forecast Error Exchange Risk Probable Loss
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