Answered: Hedging is used to deal with three…

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter3: Internal Control Over Financial Reporting: Responsibilities Of Management And The External Auditor

Section: Chapter Questions

Problem 10RQSC

See similar textbooks

Related questions

Question

Hedging is used to deal with three areas of risk exposure. Which are those risks? Name them.

Expert Solution

Step 1

Following are the three areas of risk exposure:

Transaction risk: Transaction risk alludes to the impeding effect that vacillations in outside trade rates could have on a pre-settlement exchange finished. It is the swapping scale chance related to the postponement in time among finishing up and settling an agreement.

Step 2

Economic risk: Economic risk is the probability that macroeconomic conditions, for example, exchange rates, government guidelines, or political solidness, will influence speculation, for the most part at home.

Step by step

Solved in 3 steps

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions