Section 5
Managing Exchange Risk
Book
Version 3
By Boundless
By Boundless
Boundless Finance
Finance
by Boundless
2 concepts
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Types of Exchange Exposure: Short-Run, Long-Run, and Translation
Foreign currency exposures are categorized as transaction/ short-run exposure, economic/ long-run exposure, and translation exposure.
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Types of Exchange Hedges: Forward, Money Market, and Future
Forwards, money market instruments, and futures are common instruments used to manage exchange risk.