Multi-financial international business
1. How would you define transaction exposure? How is it different from economic exposure?
2. Discuss and compare hedging transaction exposure using the forward contract vs. money market instruments. When do the alternative hedging approaches produce the same result?
3. Discuss and compare the costs of hedging via the forward contract and the options contract.
4. What are the advantages of a currency options contract as a hedging tool compared with the forward contract?
