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State some of the advantages of currency options contract as a hedging tool as compared with the forward contract?
Discuss and compare the costs of hedging through the forward contract and the options contract.
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?
Define transaction exposure and explain how it is different from the economic exposure?
Uncertainty of the exchange rate does not essentially means that the firms face exchange risk exposure. Explain this scenario.
Evaluate the given statement: “Firm may decrease its currency exposure by diversifying across the different business lines”.
Write down disadvantages and advantages of maintaining the multiple manufacturing sites as the hedge against exchange rate exposure.
List disadvantages and advantages of the financial hedging of firm’s operating exposure through the operational hedges (like relocating the manufacturing site)?
General Motors exports the cars to Spain however the strong dollar against the peseta, hurts the sales of GM cars in the Spain. In Spanish market, GM faces the competition from the French and Italian
Explain implications of the purchasing power parity for the operating exposure.
Describe determinants of the operating exposure.
Discuss the conversion and competitive effects of exchange rate changes on the firm’s operating cash flow.
Suppose that your company has an equity position within the French firm. Explain some of the condition under which the dollar/franc exchange rate uncertainty does not have the exchange exposure for yo
Discuss the given statement: “Exposure is the regression coefficient”.
How economic exposure can be defined in order to exchange the risk?
Explain how the advent of euro would affect the strategies of international diversification.
List the benefits of investing through the international mutual funds?
Explain why do investors invest within the lion’s share of their funds within the domestic securities?
Why closed-end country funds often trade at the premium or discount?
Write some of the advantages and disadvantages of closed-end country funds (CECFs) with respect to the American Depository Receipts (ADRs) as means of the international diversification.
Evaluate the home country’s multinational corporations as a tool for the international diversification.
Would exchange rate changes always raise the risk of the foreign investment? Explain some of the condition under which exchange rate changes can actually decrease the risk of foreign investment.
Explain the Sharpe performance measure concept.