Chp.11

Translation.What does the word translation mean? Why is translation exposure called an accounting exposure?

Balance Sheet Hedge Justification.When is a balance sheet hedge justified?

Transaction Versus Translation Losses.What are the main differences between losses from transaction exposure and translation exposure?

Chp12.

Operating Exposure versus Translation Exposure.What do you see as the primary difference between operating exposure and translation exposure? Would this have the same meaning to a private firm as a publicly traded firm?

Proactive Management.Operating exposures can be partially managed by adopting operating or financing policies that offset anticipated foreign exchange exposures. What are four of the most commonly employed proactive policies?

Hedging the Unhedgeable.How do some firms attempt to hedge their long-term operation exposure with contractual hedges? What assumptions do they make in order to justify contractual hedging of their operating exposure? How effective is such contractual hedging in your opinion?

SEC Edgar Files.To analyze an individual firm's operating exposure more carefully, it is necessary to have more detailed information available than in the normal annual report. Choose a specific firm with substantial international operations, for example, Coca-Cola or PepsiCo, and search the Security and Exchange Commission's Edgar Files for more detailed financial reports of their international operations.

Search SEC EDGAR Archives

www.sec.gov/cgi-bin/srch-edgar