Question
In: Finance
Distinguish between (i) transactions risk (ii) operational risk and (iii) translation risk as types of risk...
Distinguish between (i) transactions risk (ii) operational risk and
(iii) translation risk as types of risk posed by fluctuations in
exchange rates.
Solutions
Expert Solution
1) Transaction risk :- Transaction risk refers to the risk caused due to unexpected fluctuation in exchange rate before the settlement of the transaction. Transaction risk is higher , when the time gap between contact and settlement is higher. Exporters and importers are affected by this risk , and there are realized profit and loss. Taxes are applied on profit or loss.
2) Operational risk :- Operational risk is also known as economic risk. This risk refers to effect on cash flows caused due to unexpected fluctuation in the exchange rate.Operational risk is higher for firms having both input cost and product prices exposed to currency fluctuation.
3) Translation risk :- Translation risk refers to the risk related to translating the assets from the foreign currency to domestic currency in balance sheet caused due to unexpected fluctuation in currency rate. There is book value gain or loss, and no taxes applied in this case.
jeff jeffy answered 1 year agoRelated Solutions
I. Define ‘operational risk management’. II. What is strategic risk?
Give brief answers for the following questions:
I. Define ‘operational risk management’.
II. What is strategic risk?
III. What is people’s risk?
IV. What are the key areas of risk associated with business objectives?
V. Explain the factors on which the operational risk management depends.
VI. What does operational risk covers according to FSA?
VII. Outline the benefits of operational risk management.
In Toxicity and Hypersensitivity, What are the differences between Types I, II,III, and IV hypersensitivities including
In Toxicity and Hypersensitivity, What are the differences between Types I, II,III, and IV
hypersensitivities including why they occur and cells (mechanisms)
they utilize
(i) Distinguish between spot and forward foreign exchange transactions. (ii) Describe how are spot and...
(i) Distinguish between spot and forward foreign exchange
transactions.
(ii)
Describe how are spot and forward quoted in the foreign exchange
market.
(iii)
Andreas Broszio just started as an analyst for Credit Suisse in
Zurich, Switzerland. He receives the following quotes for Swiss
francs against the dollar for spot, one-month forward, 3-months
forward, and 6-months forward. 10+15
Spot exchange rate:
Bid rate
SF 1.3075/$
Ask rate
SF 1.3085/S
One-month forward
15 to 20
3-months forward
16...
1. Which of the following construction business types can have unlimited shareholders. I. II. III. IV. S corporation LLC corporation sole proprietorship (A) II and III only (B) I, II, and III (C) I, III, and IV (D) I, II, III, and IV
This question is related to civil engineering Engineering economics subject
Question: a)Distinguish between the following: i) Non- Parametric Methods ii) Semi-Parametric Methods iii) Parametric Methods b)...
Question:
a)Distinguish between the following:
i) Non- Parametric Methods
ii) Semi-Parametric Methods
iii) Parametric Methods
b) Discuss the following statistical properties of asset
returns:
i) Heavy tails
ii) Ergodicity
iii)Autocorrelation -absence of linear autocorrelation
C)Explain the following Diagnostic tests of the error term
i) White Test of heteroscedasticity
ii)Normality Test
Discuss the causes of balance sheet or translation exposure to foreign exchange risk. Distinguish between balance...
Discuss the causes of balance sheet or translation exposure to
foreign exchange risk. Distinguish between balance sheet exposure
and transaction exposure. Provide examples to illustrate your
points.
Explain the termination of Polymerase I, II, and III.
Explain the termination of Polymerase I, II, and III.
2014 I 31 2017 I 69 II 24 II 54 III 23 III 46 IV 16...
2014 I 31 2017 I 69 II 24 II 54 III 23 III 46 IV 16 IV 32 2015 I
42 2018 I 82 II 35 II 66 III 30 III 51 IV 23 IV 38 2016 I 53 2019 I
91 II 45 II 72 III 39 III 59 IV 27 IV 41 Create a multiple
regression equation incorporating both a trend (t=0 in 2013: IV)
and dummy variables for the quarters. Let the first quarter
represent the reference...
2014 I 31 2017 I 69 II 24 II 54 III 23 III 46 IV 16...
2014 I 31 2017 I 69
II 24 II 54
III 23 III 46
IV 16 IV 32
2015 I 42 2018 I 82
II 35 II 66
III 30 III 51
IV 23 IV 38
2016 I 53 2019 I 91
II 45 II 72
III 39 III 59
IV 27 IV 41
Create a multiple regression equation incorporating both
a trend (t=0 in 2013: IV) and dummy variables for the quarters. Let
the first quarter represent the reference...
Which of the following differences between BASEL III and BASEL II are not true: I. Basel...
Which of the following differences between BASEL III and BASEL
II are not true: I. Basel III strengthened Basel II capital
requirements by increasing CET1 capital to 6% of a bank's total
assets. II. Basel III established two new financial liquidity
requirements, the Liquidity Coverage Ratio and the Net Stable
Funding Ratio. III. Basel III established a minimum leverage ratio
of Tier 1 Capital to total exposure of 3%. IV. Basel III required a
new "discretionary counter-cyclical buffer" of 2.5%...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- JAVASCRIPT: Please create an array of student names and another array of student grades. - Create...
- Topic - Construction: Structural, loads, tension 1.) Explain why pure tension members are the most efficient...
- Procter and Gamble (PG) paid an annual dividend of $ 1.62$1.62 in 2009. You expect PG...
- locate a recent case of online child pornography. Write a summary of the incident and describe...
- #Python 5. Write function called evaluate() that evaluates the following Python expressions or assignments as specified:...
- Suggest journal, research paper link reference. i need this as reference for writing a research with...
- Cryptography is used heavily in internet communications. True or false? Explain
ADVERTISEMENT