Exchange Rate Exposure

Explain each of the following types of exchange rate exposures. Provide examples to demonstrate how these work: Transaction Translation Economic Explain how companies can use each of the following techniques to mitigate exchange rate exposure. Provide examples (the more detailed the better). Indicate what type(s) of foreign exchange exposure your examples mitigate: Future and forward contracts Call and put options Cross-hedging Money Market hedge Restructuring operations

Note: In your application of the different hedging techniques include an explanation as to how a company can use futures to hedge both receivables and payables. Indicate whether the company should be purchasing or selling the foreign currency forward for each of these types of transactions.