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- Exchange rate risk is a. The risk associated with the use of debt financing by companies b. The risk of doing business in a particular industry or environment c. The risk of loss due to imports and exports dominated in other currencies d. The uncertainty about the time element, the price concession, and the conversion to cash. ************************** correct answer please.QUESTION Hedging is a risk management strategy that is used in limiting or offsetting probability of loss from fluctuations in the prices of commodities, currencies, or securities. In effect, hedging is a transfer of risk without buying insurance policies. REQUIRED: Discuss the importance of hedging to the financial risk manager Are there any downside to hedging?Which of the following is an exchange risk management technique through which the firmcontracts with a third party to pass exchange risk onto that party, via instruments such as forwardcontracts, futures, and options? a. Risk Transfer b. Risk Avoidance c. Risk Adaptation d. Diversification
- Match the risk with the correct transaction (if any): v The DC appreciates, altering relative prices in the current account A. Risk from translation to the FC firm with DC operations v The DC depreciates, altering relative prices in the current account B. Risk to the seller of goods to the FC buyers v The DC depreciates, altering relative prices in the financial account C. Risk to the foreign investor invested domestically v The DC appreciates, altering relative prices in the financial account D. Risk to the buyer of inputs from FC firms v The DC appreciates, altering the spot FX rate E. RIsk form translation to the DC firm with FC operations F. Risk to the investor invested abroadIf the value of contractual transactions is affected by exchange rate fluctuations, most likely the firm has the ______ exposure. A. economic B. country risk C. transaction D. translationA foreign currency loan is a typical example for O a. Currency Risk O b. Interest rate risk O c. Translation Exposure O d. Transaction Exposure
- 1. how does marketl risk relate to the Washington Mutual case and how can it be mitigated 2. what control Strategy for Market Risk can be used in the Washinton Mutual case 3. what recommendations can Washinton Mutual use to assist with there market risk and interest rate riskLiquidity risk is a. The risk of doing business in a particular industry or environment b. The uncertainty about the time element, the price concession , and the conversion to cash c. The risk if loss due to import and export dominated in other currencies d. The risk associated with the use of debt financing by companies. **************************** correct answer please&***************Which of these has the biggest potential risk area? O a. Cash Machines O b. Mobile Banking O c. Cheque Books O d. Shares
- The advantage of over-the-counter products such as swaps or forwards contracts,relative to exchange-traded products such as options or futures, is: * A. standardization B. regulation C. flexibility. D. all of the given answersWhich of the following is not a prudent practice in hedging against transactional exposures? A. Use only options to capture the potential upside surprises. B. Hedge against all receivables and payables in all markets the company operates. C. Only hedge if the currency is a major currency. D. none of the above.The deterioration of economic conditions; deterioration of the value of the local currency in terms of the bank’s base currency; convertibility or transfer risks; market crisis are examples of what kinds of risk? Select one: a. Solvency risk b. Foreign exchange risk c. Sovereign risk d. Credit risk
