Unperformed Contracts. Which contract is more likely not to be performed: a payment due from a customer in foreign currency (a currency exposure), or a forward contract with a bank to exchange the foreign currency for the firms domestic currency at a contracted rate (the currency hedge)?

Cash Flow Variability. How does currency hedging theoretically change the expected cash flows of the firm?

Functional Currency Designation. Can or should a company change the functional currency designation of a foreign subsidiary from year to year? If so, when would it be justified?

Translating Assets. What are the major differences in translating assets between the current rate method and the temporal method?

Macroeconomic Uncertainty. Explain how the concept of macroeconomic uncertainty expands the scope of analyzing operating exposure.

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?