Perceived role in determining exchange rates

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Reference no: EM132060996

1. It has been suggested that the object of hedging is not to earn excess returns but to achieve a desired pattern of risk and return. Evaluate this statement in the context of managing foreign exchange risk.

2. Explain what is meant by ‘the law of one price’ and critically evaluate its perceived role in determining exchange rates.

3. Evaluate the additional risks associated with direct investment in a foreign country and suggest how they could be managed.

Reference no: EM132060996

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