What is the significance of foreign exchange rate risk, Macroeconomics

Foreign exchange risk is the level of uncertainty that a company must handle for changes in foreign exchange rates that will unfavourably affect the money the company receives for goods and services over a period.

For example, a corporation sells goods to a foreign company. They ship the goods today, but will not receive payment for various days, weeks or months. During this grace period, the exchange rates vary. At the time of settlement, when the foreign company pays the domestic company for the goods, the rates may have travelled to a level that is less than what the company contemplated. As a result, the company may vary a loss or the profits may erode.

 

Posted Date: 4/1/2013 3:31:50 AM | Location : United States







Related Discussions:- What is the significance of foreign exchange rate risk, Assignment Help, Ask Question on What is the significance of foreign exchange rate risk, Get Answer, Expert's Help, What is the significance of foreign exchange rate risk Discussions

Write discussion on What is the significance of foreign exchange rate risk
Your posts are moderated
Related Questions
Macroeconomics We have explained several concepts and Macroeconomic Aggregates which form the basic terminology of macroeconomic analysis. Like other empirical sciences, econom

"No point is better accepted than the fact that the monopoly price is higher and the output smaller than what is socially ideal. The public is the victim." (a) Explain between

you and your neighbor (n) consume without trading. suppose you are initially consuming 7 bananas and 3 coconuts and your neighbor is initially consuming 6 bananas and8 coconuts. Yo

Index number formulas

show on the market for cheese that impact of what happened in the milk market.

Suppose the country club bills based on a sample of 4 members are: 383, 1,051, 637, 928. What is the standard deviation for this sample of bills? (please round your answer to 1 dec

Q. Describe the working of Commercial banks? Fact that currency inside commercial banks isn't money may strike you as odd though it is an important principle. 100 dollar bill i

Determinants of Money Supply The preceding sections concentrate on the processes through which the commercial banking system creates and destroys deposits by purchasing and se

Name the largest budget deficit country In 2009 Greece was eurozone country with largest budget deficit (about 16.0% of GDP), while Finland was the country with the smallest bu