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7 Cards in this Set
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- Back
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Transaction Exposure
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The potential that an organization could suffer economic loss or experience economic gain upon settlement of individual transactions as a result of changes in the exchange rates.
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Economic Exposure
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The potential that the PV of an organization's cash flows could increase or decrease as a result of changes in the exchange rates.
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Translation Exposure
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The potential that assets, liabilities, equity, or income of a consolidated organization that includes foreign subsidiaries will change as a result of changes in the the exchange rates and defines the effect of exchange rate fluctuations on financial position and operations.
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Futures Hedge
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Entitles its holder to either purchase or sell a particular number of currency units of an identified currency for a negotiated price on a stated date.
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Forward Hedge
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Same as futures hedge, but much larger amounts.
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Money market hedge
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Uses international money markets to plan to meet future currency requirements.
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Transfer Pricing
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Claim profits in the country with the lowest tax rate.
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