Hello, I need help, my course is Risk Management. I am struggle to find out the differences
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Question:
Hello, I need help, my course is Risk Management.
I am struggle to find out the differences between the FX exposures: Transaction, Translation and Operating.
And explain to me how to do this practice question which relates to manage the transaction exposure:
> A US company sells goods to Vietnamese buyer for VND 20 billions in 2 months. The current exchange rate is 20,000VND/$. The firm expects to exchange the VND for 20b/20k=$1billion. Transaction exposure arises. What happens, if the VND weakens to 22,000VND/$ and if the VND strengthens to 18,000VND/$ and how to manage/hedge the exposure?
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