How does your foreign exchange exposure arise

Reference no: EM131291224

Imagine that you have just been appointed treasurer of a consumer goods company. It manufactures only in the United Kingdom, but exports over 50 per cent of its sales. As the market is an international one, you face the same competitors in each national market, including your domestic market. Your major competitors are Japanese and German.

(a) How does your foreign exchange exposure arise?

(b) How would you measure it?

(c) Could your exposure be reduced by investing in manufacturing facilities abroad? (Association of Corporate Treasurers: Part II, September 1985, Paper in Currency Management)

Reference no: EM131291224

Questions Cloud

Are currency correlations perfectly stable over time : Are currency correlations perfectly stable over time? What does your answer imply about using past data on correlations as an indicator for the future?

What is netting and how can it improve an mnc’s performance : What is netting and how can it improve an MNC's performance? How can an MNC implement leading and lagging techniques to help subsidiaries in need of funds?

Identify the health concerns of children : Questions: Identify the health concerns of children. Discuss health services available to children. Discuss the racial & ethnic disparities in health status. Identify and discuss the challenges faced in rural health and discuss methods that can be..

How us co inc could implement a money market hedge : Assume that US Co Inc has net receivables of CHF100,000 in 90 days. The spot rate of the franc is $.50, and the Swiss interest rate is 2 per cent over 90 days (not 2 per cent per annum). Suggest how US Co Inc could implement a money market hedge.

How does your foreign exchange exposure arise : Could your exposure be reduced by investing in manufacturing facilities abroad? (Association of Corporate Treasurers: Part II, September 1985, Paper in Currency Management)

How can ethical challenges-leadership and sustainability : How can ethical challenges, leadership, and sustainability, influence a person view of change? (Include at least 120 words for completed understanding and at least one empirical article)

Explain both interest rate swaps and currency swaps : If you expect short-term interest rates to rise more than the yield curve suggests, would you rather pay a fixed long-term rate and receive a floating short-term rate, or receive a fixed long-term rate and pay a floating short-term rate?

Adventure on the one hand and stability and safety : Human beings have desires for change and adventure on the one hand and stability and safety on the other hand. How do leaders most effectively address both of these needs in organizations that invoke a model of continuous change? (Include an empi..

Judgment in managerial decision making : Read the Chapter 10 Making Rational Decision in Negotiations, which is in the book "Judgment in Managerial Decision Making".

User Account

All Pages