--%>

Transaction and Economic exposure

Define transaction exposure and explain how it is different from the economic exposure?

E

Expert

Verified

Transaction exposure is the sensitivity of realized domestic currency values of the firm’s contractual cash flows denominated in the foreign currencies to unexpected changes in exchange rates. Unlike the economic exposure, transaction exposure is properly defined and short-term.

   Related Questions in Financial Accounting

  • Q : Real gross profit ratio and standard

    Is real gross profit ratio is bigger than standard gross profit ratio?

  • Q : Factors influencing the value of

    Factors influencing the value of Goodwill: A) Proficient managementB) Quality of productC) Place of businessD) Accessibility of raw materialE) Positive contracts

  • Q : Closing entry for financial accounting

    A journal entry that moves the effects of revenues or expenses to the owners' equity account. Only temporary account that is on the income statement is closed. The purpose of a closing entry is twofold. First, it moves revenue to retained earnings on the balance sheet

  • Q : Flexible and fixed budgets Give a brief

    Give a brief contrast between flexible and fixed budgets?

  • Q : Conglomerate expansion Evaluate the

    Evaluate the given statement: “Firm may decrease its currency exposure by diversifying across the different business lines”.

  • Q : Measures to avoid financial crisis In

    In integrated world financial market, financial crisis in country is rapidly transmitted to the other countries, resulting in the global crisis. State some of the measures would you propose in order to avoid the recurrence of the Asia-type crisis.

  • Q : French Association of Private Companies

    In the year 1995, working group of the French chief executive officers was formed by the Confederation of French Industry (CNPF) and the French Association of Private Companies (AFEP) for studying the structure of the French corporate governance. Group has reported th

  • Q : Liabilities and Assets in Balance Sheet

    Why Liabilities are always on the left side and Assets on right side in the Balance Sheet?

  • Q : Trading A CD/$ bank trader is presently

    A CD/$ bank trader is presently quoting a small figure bid-ask of 35-40, while rest of the market is trading at the CD1.3436-CD1.3441.  Specify what all is implied about trader’s beliefs by his prices?

  • Q : What is Market for foreign exchange

    Provide a complete definition of Market for foreign exchange.