Uncertainty of exchange rate

Uncertainty of the exchange rate does not essentially means that the firms face exchange risk exposure. Explain this scenario.

E

Expert

Verified

A firm can have natural hedging position due to flexible sourcing capabilities, diversified markets, and so forth. Additionally, to the extent that PPP demonstrate insignificant changes of the exchange rate doesn’t influence the firms’ competitive positions. Under such conditions, firms do not required to worry about the exchange risk exposure.

   Related Questions in Financial Accounting

  • Q : Functions of Bank Write some of the

    Write some of the functions of Bank?

  • Q : Factors influencing real estate market

    What are the factors which influences real estate market?

  • Q : Case study of a pharmaceutical group in

    The XYZ Group, a supplier of pharmaceutical equipment, systems and services, has its head office in London and primary production facilities in the US. The company also has a successful subsidiary in South Africa, which was established in 1990. XYZ South Africa does n

  • 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 : Evaluation of discount and premium

    Describe how discount and premium are evaluated whenever the assets are priced-to-market. When would law of one price prevail within the international capital markets in case foreign equity ownership restrictions are imposed?

  • Q : Economic exposure How economic exposure

    How economic exposure can be defined in order to exchange the risk?

  • Q : Current and capital account deficit

     Exhibit 3.3 states that in year 1991, the U.S. had current account deficit and consecutively a capital account deficit. Explain about how this may occur?

  • Q : Free international trade in goods and

    Explain, how economic well-being of a country is improved through free international trade in the goods and services?

  • Q : Super Profit Method in Goodwill Super

    Super Profit Method: (Goodwill method): When a firm earns huge profit in comparison to normal profit (usually earned by other firms of similar industry) then the difference is termed as Super Profit. Goodwill is computed on the basis

  • Q : Advent of euro affecting international

    Explain how the advent of euro would affect the strategies of international diversification.

©TutorsGlobe All rights reserved 2022-2023.