Chapter 1, Problem 15QA

Which of the following risk responses would be most likely to be given consideration for an organization which is a trade importer and exporter? a. Reduce risk b. Avoid risk c. Share risk d. Accept risk

Investors and MNCs exporting or importing goods and services or making foreign investments throughout the global economy are faced with an exchange rate risk,which can have severe financial consequences on firms profitability,cash flows,and their market value,if not managed appropriately. MNC's use a number of external techniques  of risk(exposure)management and resort to contractual relationships outside thier companies in order to reduce (or redistribute)the risk of foreign exchange losses.What are the determinants of hedging currency risk or foreign exchange exposures which pose risks to MNC's cashflows,competitiveness,marker value and financial reporting.

What is the difference between technology risk and operational risk? How does internationalizing the payments system among banks increase operational risk