international business

posted by .

True or False:

It is possible for a firm to purchase complete insurance against the risks that arise from changes in exchange rates in the foreign exchange market.

  • international business -

    There is such a thing as "hedging" but that is not a sure thing against the fluctuations in exchange rates:

    A method for hedging an investor against a currency risk associated with a purchase of a security having a value, the investor having purchased the security in a foreign currency and the investor desiring to receive the proceeds from a sale of the security in a home currency. The foreign currency and home currency have an exchange rate at the time of the purchase and an exchange rate at the time of the sale. The method includes the steps of receiving a request for hedging against the currency risk for a time period. Next, a cost is calculated for hedging against the currency risk based on the foreign currency, the home currency, the exchange rate at the time of the purchase, the value and the time period. Next, the investor is provided with the proceeds from the sale based on the exchange rate at the time of the sale if the exchange rate at the time of the sale is greater than the exchange rate at the time of the purchase. Finally, the investor is provided with the proceeds from the sale based on the exchange rate at the time of the purchase if the exchange rate at the time of the purchase is greater than or equal to the exchange rate at the time of the sale.

    Sra

Respond to this Question

First Name
School Subject
Your Answer

Similar Questions

  1. business

    What is foreign investment? can some explain international investment theory to me?
  2. Economics

    How do you proceed in calculating exchange rates between countries and what data do you need?
  3. Economics

    Suppose that a small open economy begins to use credit cards, starting from monetary equilibrium, allowing households to hold more of their wealth in interest bearing assets. Discuss the effect on real and nominal money supply, foreign-exchange …
  4. econ-exchange rate

    E=exchange rate, H=Home, F=foreign Usually exchange rate are expressed in units of home currency per units of foreign currency. (E H/F) But why for the real exchange rate, it is q F/H ?
  5. Business

    You are assigned the duty of ensuring the availability of 100,000 yen for the payment that is scheduled for next month. Considering that, your company possesses only U.S. dollars, identify the spot and forward exchange rates. What …
  6. Banking & Money

    Couple questions here... "Under fixed exchange rates," A. The Free Market is the major determinant of the exchange rate. B. Official government transactions maintained the agreed-upon exchange rate by buying and selling foreign exchange. …
  7. International Business

    Consider the following scenario: You have been asked by a local college to write a lecture that explains the gold standard and addresses the functions of the world's major foreign exchange markets. Write a 1,050 to 1,400 word summary …
  8. investment

    publicly-owned stock that is not listed on an exchange is traded in the over-the counter markets such as that Nasdap stock market, true or false. systematic risk is reduce through diversification is true or false unsystematic risk …
  9. Marketing

    How do changes in exchange rate affect Product?
  10. Foreign exchange

    Just want to have clarification on foreign exchange rates. I am confused with appreciate/depreciate...which is better, etc. Let's say a Canadian company has USD costs to be paid. It will be better for the company if USD depreciates/lose …

More Similar Questions