Assume that 1 unit of Currency Y costs 0.49 units of Currency X, 1 unit of Currency Z costs 7.99 units of Currency Y, and 1 unit of Currency Z costs 4.02 units of Currency X. By what percent is Currency Z miss-priced relative to Currency Y? If Z is overpriced, type a positive number and if Currency Z in underpriced, type a negative number. Go out four decimals. ( Hint to get you started: Take any one of those transaction rates and figure out what the third one should be)

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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.