Term
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Definition
1. transaction
2. translation
3. operating |
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Term
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Definition
| __________ exposure results from transactions that are known, contractually binding future foreign currency denominated cash inflows and outflows |
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Term
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Definition
| Even purely domestic firms have ________ exposure. |
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Term
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Definition
| Both ____________ exposure and ________ exposure are cash-flow exposures that combined equal the company's transaction exposure |
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Term
| unexpected currency fluctuations |
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Definition
| Hedging only protects the firm from ______ |
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Term
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Definition
| _____________ hedging involves hedging to protect against anticipated currency movements |
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Term
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Definition
| __________ involves offsetting exposures in one currency with exposures in the same or another currency that is highly correlated |
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Term
| centralized currency exposure |
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Definition
| ability to take advantage of exposure netting is one of the benefits of __________ management |
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Term
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Definition
| attempting to profit from foreign exchange forecasting is ________ rather than hedging |
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Term
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Definition
| _________ is not a long-term solution to permanent changes in exchange rates |
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Term
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Definition
| real cost of hedging with a forward contract is a(n) _______________ |
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Term
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Definition
| the difference between the forward rate and the actual future spot rate |
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Term
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Definition
| involves simultaneous borrowing/lending activities to lock in the dollar value of a future foreign currency cash flow |
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Term
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Definition
| borrow in the foreign currency |
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Term
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Definition
| deposit/lend/invest in the foreign currency |
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Term
| homemade forward contract |
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Definition
| a money-market hedge effectively create a __________ |
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Term
| forward rate NOT the spot rate |
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Definition
| pricing decisions should be made using the _______ rate |
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