Week 3 – Discussion 1
Prior
to beginning work on this discussion forum, read Chapters 6 and 7 of the text.
A
company makes an export sale denominated in a foreign currency and allows the
customer one month to pay. Under the two-transaction perspective, accrual
approach, how does the company account for fluctuations in the exchange rate
for the foreign currency? Why might a company prefer a foreign currency option
rather than a forward contract in hedging a foreign currency firm commitment?
Why might a company prefer a forward contract over an option in hedging a
foreign currency asset or liability?
Write: Make sure your response addressing the questions is more than
200 words and that you include an in-text citation or a brief quote from the
reading material where appropriate. You may find the Writing Center’s APA: Citing Within
Your PaperLinks to an external site. resource helpful.
Week 3 – Discussion 2
Prior
to beginning work on this discussion forum, read Chapters 6 and 7 of the text.
What
are the two major conceptual issues that must be resolved in translating
foreign currency financial statements? What factors create a balance sheet (or
translation) exposure to foreign exchange risk? How does balance sheet exposure
compare with transaction exposure?
Write: Make sure your response addressing the questions is more than
200 words and that you include an in-text citation or a brief quote from the
reading material where appropriate. You may find the Writing Center’s APA: Citing Within
Your PaperLinks to an external site. resource helpful.
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