--%>
Assignment Help - homework help

Eliminating exposure of the currency

Banks find it essential in order to accommodate their client’s requirements for buying or selling foreign exchange forward, in several instances for the hedging purposes.  How the bank can eliminate the exposure of the currency it has made for itself by accommodating a client’s forward transaction?

E

Expert

Verified

Swap transactions provide a way for bank in order to diminish the currency exposure in the forward trade.  A swap transaction is defined as the simultaneous sale (or purchase) of the spot foreign exchange beside the forward purchase (or sale) of about same amount of foreign currency.  For example, suppose a bank customer desires to buy the dollars three months forward beside the British pound sterling.  Bank may handle this trade for its customer and concurrently neutralize the risk of exchange rate within the trade by selling (borrowed) the British pound sterling spot against the dollars. Bank may lend dollars for three months up till they are required to deliver against the dollars which it has sold forward.  

   Related Questions in Financial Accounting

  • Q : Matlab Applications in Image and Video

    Image and video processing is most difficult topic in electrical and electronics field. This topic becomes trickier if you are taking use of Matlab in this. Student faces a lot of problem in image and video processing theories. If you are messed up with same difficulties

    		•
  • Q : Define Revenue Revenue : The amount

    Revenue: The amount (sum) of money which a company really receives throughout a specific period, comprising discounts and deductions for the returned merchandise. This is the "top line" or "annual income" figure from which costs are subtracted to find

    		•
  • Q : Guidelines for effective communication

    Define and explain the four guidelines for effective communication in families. Give examples to describe each guideline.

    		•
  • Q : Portfolio of Sharemarket SHAREMARKET

     SHAREMARKET ASSIGNMENT SHEET  - Select a share portfolio consisting of one company from each group listed above. The total value of your portfolio should add up to

  • Q : State Net Profit State Net Profit in

    State Net Profit in brief?

    		•
  • Q : Financial and Operational measures of

    State some of financial and operational measures MNC can take minimize the political risk linked with the foreign investment project?

    		•
  • Q : Help Otobai Motor Company is currently

    Otobai Motor Company is currently paying a dividend of $1.40 per year. The dividends are expected to grow at a rate of 18% for the next three years and then a constant rate of 5% thereafter forever. What is the value of its current stock price? Assuming that the discount rate is 10%.

    		•
  • Q : Controlling the translation exposure It

    It is, normally, not possible to fully remove both the translation exposure and transaction exposure.  In some cases, eradication of one exposure will also eliminate the other.  However in other cases, removal of one exposure really creates the other. 

    		•
  • Q : Investment approach of Lynch Investment

    Investment approach of Lynch: Peter Lynch, the best known mutual fund manager, also adopts the words of Benjamin Graham in the sense that he looks at companies not from the perspective of how the stock prices move

    		•
  • Q : Difference between Finance and Accounts

    What are the basic differences between Finance and Accounts?

    		•