Show the transaction risk, Financial Management

Q. Show the Transaction risk?

This is the risk occur on short-term foreign currency transactions that the actual income or cost may be different from the income or cost expected when the transaction was agreed. For instance a sale worth $10000 when the exchange rate is $1.79 per £ has an expected sterling value is $5587. If the dollar has depreciated beside sterling to $1.84 per £ while the transaction is settled the sterling receipt will have fallen to $5435. Transaction risk consequently affects cash flows and for this reason most companies choose to hedge or protect themselves against transaction risk.

Posted Date: 7/12/2013 3:59:26 AM | Location : United States







Related Discussions:- Show the transaction risk, Assignment Help, Ask Question on Show the transaction risk, Get Answer, Expert's Help, Show the transaction risk Discussions

Write discussion on Show the transaction risk
Your posts are moderated
Related Questions
ON THE BASIS OF FUNCTIONS •Functional / Subsidiary budgets: A subsidiary budget is a budget of income or expenditure appropriate to or the responsibility of functions, like

FIXED ASSETS                          200 000                       LONG TERM LIABILITIES CURRENT ASSETS CASH             40 000                       LOAN

In bootstrapping method, on-the-run treasury issues are used as they are fairly priced, and there is no credit risk or liquidity risk involved. In practice observed yie

Your task is to prepare a presentation for a group of board members who are considering an investment of $100 million in your company. Your presentation will consist of three disti

An issue with a put provision included in the agreement grants the bondholder the right to sell bonds back to the issuer at a pre-specified rate

Q. Disadvantage or redundancy of excessive working capital? Excessive working capital means idle funds which earns no profit for the business operation it should have nighters

Cascade Water Company (CWC) currently has 30 000 shares of common stock outstanding, trading at a price of R42 per share. CWC also has 500 000 bonds outstanding that are currently

At the end of the fiscal year ending June 30, 2003, Microsoft reported common equity of $64.9 billion on its balance sheet, with $49.0 billion invested in financial assets (in the

Q. Working Capital as a Percentage of Total Assets? This approach of estimation of working capital requirement is based on the fact that the total assets of the firm arc consis

Q. Can you explain Dispersion method? Dispersion method help to assert risk in receiving a return on investment. The greater the potential dispersion, the greater the risk. One