Foreign Exchange Risk Management. Foreign Exchange Risks. Transaction Risk Translation Risk Economic Risk. Transaction Risk. The risk of changes in the expected value of a contract between its signing and its execution as a result of unexpected changes in foreign exchange rates.
Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.
Self-regulated OTC market
Contract with dealer
Cash flow only at maturity
Settled by executing contract
Hedge by buying forward the short currency or selling forward the long currency
Selected currencies, standard contracts, standard maturities
Government-regulated exchange-based market
Contract with exchange
Requires margin account
Marked to market daily
Settled by offsetting trade
Hedge by making a transaction whose gains or losses offset those of the underlying positionForward and Futures Markets