Currency risk is the same as currency exposure and represents random changes in exchange rates. represents random changes in exchange rates. is the same as currency exposure. measure "what the firm has at risk." Forward parity states that any forward premium or discount is equal to the actual change in the exchange rate. the nominal interest rate differential reflects the expected change in the exchange rate. an increase (decrease) in the expected inflation rate in a country will cause a proportionate increase (decrease) in the interest rate in the country. any forward premium or discount is equal to the expected change in the exchange rate. If you think that the dollar is going to appreciate against the euro, you should buy call options on the euro. sell call options on the euro. buy put options on the euro. none of the options