1. XYZ, an Australian exporter, has entered into a contract to sell goods in 6 months time and will receive USD 1 million for these goods. What type of exposure is this an example of and why? (a) Economic exposure (b) Translation exposure (c) Transaction exposure (d) Competitive exposure 2. How can a firm protect itself against economic exposure? (a) Money market hedges (b) Geographical diversification (c) Forward contract hedges (d) Futures market hedging

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Q: The following are nine global business terms used in this chapter. Hedging Foreign exchange risk…

A: Business: Business means exchange of goods or services with the intention of earning profit.

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A: workings:

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A: Translation Exposure is the kind of exposure or risk that impacts the value of the company's equity,…

Q: Co

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A: The aim of consolidated profit is to express situation and results that controls other companies.

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A:

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A: Economic exposure is the change in cash flow of the due to changes in the exchange rate.

Exchange Rate Risk

It is the possibility that the value of a currency will fluctuate in the future. In the wake of globalization, business establishments have increasingly ventured into international markets. The volume of international trade has prospered excellently in the near past and is expected to be more affluent in the future. The use of exchange-traded derivative financial instruments has been multi-folded to provide for the requirements of various MNCs and offshore potential investors. Most banks and financial institutions have helped integrate the global economies. Our Government has introduced some bold and extreme measures to fulfil the purpose behind the fiscal, industrial, and monetary policies. The enactment of GST is a huge step towards streamlining the taxation system of the country. Owing to Covid-19, this aspect of corporate risk management has become critical.