Explain how fluctuations in exchange rates give rise to foreign exchange risk.

Describe the concepts of cash flow hedges, fair value hedges, and hedge accounting.

Prove the benefits of the hedging policies in respect to the firm value and prove whether the corporate hedging affects it.

According to the Modigliani and Miller theorem, there is no reason to hedge because hedging does not add value to the firm.Is this position valid.

Compare and contrast a number of strategies for managing foreign exchange exposures.