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HW-1095 Foreign exchange questions
1. Provide a comprehensive explanation of foreign exchange markets. Be sure to include examples of how forward markets and spot markets operate
2. There are some risks involved with international transactions due to fluctuations of the foreign currency exchange rates. One way to mitigate those risks is through hedging. Discuss the hedging options: forward contracts and option contracts. What are the advantages and disadvantages of each alternative? What are the costs of each alternative? When is one alternative preferred over the other?
3. It is generally not possible to completely eliminate both translation exposure and transaction exposure. In some cases, the elimination of one exposure will also eliminate the other. In other cases, the elimination of one exposure actually creates the other. Discuss which exposure might be viewed as the most important to manage. What are the advantages and disadvantages of the common methods for controlling translation exposure?
4. Identify and discuss one type of international banking office and a service it provides.
5. Discuss the process of bringing a new international bond issue to market. What should a borrower consider before issuing dual-currency bonds? What should an investor consider before investing in dual-currency bonds
6. Discuss the advantages and disadvantages of closed-end country funds (CECFs) relative to American depository receipts (ADRs) as a means of international diversification. Why do you think closed-end country funds often trade at a premium or discount?
7. Reflect on the concepts that have been introduced and evaluated throughout this course. Identify one concept and explain how this concept will help you grow both academically and professionally
Answer will be sent by email as attachment.
2. There are some risks involved with international transactions due to fluctuations of the foreign currency exchange rates. One way to mitigate those risks is through hedging. Discuss the hedging options: forward contracts and option contracts. What are the advantages and disadvantages of each alternative? What are the costs of each alternative? When is one alternative preferred over the other?
3. It is generally not possible to completely eliminate both translation exposure and transaction exposure. In some cases, the elimination of one exposure will also eliminate the other. In other cases, the elimination of one exposure actually creates the other. Discuss which exposure might be viewed as the most important to manage. What are the advantages and disadvantages of the common methods for controlling translation exposure?
4. Identify and discuss one type of international banking office and a service it provides.
5. Discuss the process of bringing a new international bond issue to market. What should a borrower consider before issuing dual-currency bonds? What should an investor consider before investing in dual-currency bonds
6. Discuss the advantages and disadvantages of closed-end country funds (CECFs) relative to American depository receipts (ADRs) as a means of international diversification. Why do you think closed-end country funds often trade at a premium or discount?
7. Reflect on the concepts that have been introduced and evaluated throughout this course. Identify one concept and explain how this concept will help you grow both academically and professionally
Answer will be sent by email as attachment.
