Question

In: Finance

“Transaction exposure is a cash flow exposure”. Explain.


  1. “Transaction exposure is a cash flow exposure”. Explain.                                    

  2. Discuss the term “Triangular arbitrage” and how explain how it differs from one-way arbitrage

Solutions

Expert Solution

Answering question first as per Chegg's guidelines

1.A Cash flow exposure is associated with trade flows and capital flows.It involve an actual conversion of foreign currency receivables and payables into the domestic currency.


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