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How do define transaction exposure

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Reference no: EM132973888

Problem 1: How do you define transaction exposure? Explain the differences between transaction exposure and economic exposure in detail.

Problem 2: MNCs can hedge transaction exposure with forward contracts or money market instruments. Explain the differences in these two approaches.

Problem 3: What advantages does a currency options contract have as a hedging tool compared with a forward contract?

Problem 4: Should a firm hedge? Explain.

Reference no: EM132973888

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