--%>
Assignment Help - homework help

Hedging transaction exposure and money market instruments

Compare and discuss the hedging transaction exposure by using the forward contract vs. money market instruments. When the optional hedging approaches do creates the same result?

E

Expert

Verified

Hedging transaction exposure by the forward contract is attained by selling or buying the foreign currency receivables or payables forward. Otherwise, money market hedge is achieved by borrowing or lending the present value of the foreign currency receivables or payables, thus creating offsetting the foreign currency positions. In case interest rate parity is holding, two hedging methods are same.

   Related Questions in Financial Accounting

  • Q : Article on maintenance policy for plant

    Write an article on the maintenance policy for overall costs and enhancing plant productivity.

    		•
  • Q : Performing the capital budgeting

    Explain difference between performing the capital budgeting analysis from the parent firm’s perspective as opposed to the project perspective.

    		•
  • Q : World beta concept of a security

    Explain the world beta concept of a security.

    		•
  • Q : Abatement The process of allocating the

    The process of allocating the arrears of estate assets to the distributions. Distributions from the estate proceed in a particular order starting with specific legacies, effusive legacies, general legacies, and finally residuary legacies. If legacies assets are not capable to meet the will's prov

    		•
  • Q : Define Margin Improvement Margin

    Margin Improvement: Margins in the business remained beneath pressure, even previous to the economic downturn for the industry as an entire, returns on capital have continued under the cost of capital. Previous to the falls in the second half of the y

    		•
  • Q : Appropriated retained earnings The

    The portion of retained earning that is not available for dividends. To appropriate retained earnings, the company must record the partitioning of retained earnings. The company can use appropriated retained earnings for contingencies or big projects. Appropriating retained earning does not invol

    		•
  • Q : Free-riding firms without tradable

    Explain how do firms with no tradable assets get free-ride from the firms whose securities are internationally tradable?

    		•
  • Q : Importance of international financial

    Explain the importance in studying the international financial management?

    		•
  • Q : Evaluate the impact of a recent

    A 2000 word essay (maximum allowed 2,200) Accessing Learning Outcomes: Knowledge 1 and 2 Skills 1, 2, 3 and 5                 "Evaluate the impact of a recent healthcare initiative on nursing practice".<

    		•
  • Q : Forecast future and forward exchange

    It is extremely difficult in order to forecast future exchange rates more precisely as compared to forward exchange rate or to the current spot exchange rate, as per the researchers. How these findings can be interpreted?

    		•