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What is meant by balance sheet exposure versus transaction exposure? What is the difference between the current rate method and the temporal method of translation?

What is meant by balance sheet exposure versus transaction exposure? What is the difference between the current rate method and the temporal method of translation? When is each appropriate? Can a company hedge against balance sheet exposure? Should it? Why or why not?

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1 Balance Sheet Exposure vs Transaction Exposure Balance Sheet Exposure This refers to the risk a company faces due to fluctuations in exchange rates ... blur-text-image

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