W6
Week 6
Q1 Discussion# 1
Describe two of the different types of foreign exchange exposures faced by companies engaged in international business. Explain what causes each type of exposure and describe a method for mitigating each of these risks.
Q2 Comment #1 to KF
There are three types of Foreign exchange exposures but I will be focusing on just Transaction Exposure and Translation Exposure.
Transaction exposure is the basic form of foreign exchange exposure caused due to the happening of an actual transaction in the international business. This exposure is incurred due to the fluctuations in the currency price of the transacting countries. Goods bought from a foreign country and payables are in foreign currency to be paid after fixed period, the buyer may end up paying higher amount on the due date as currency value may increase. This will increase the purchase price on the payment date. Mitigation techniques are forward contracts, futures contracts, use of a money market hedge, contractual risk sharing, pricing adjustments based on forward rates, foreign currency accounts, and foreign currency options.
Translation exposure is also known as accounting exposure. The exposure is caused due to the translation of books of accounts into the home currency. The transactions recorded in the books of foreign currency may result in an exposure when translated into the books of accounts of the home currency. The translated financial statements show the position of the company as on a date in its home currency. The exposure can even get reversed in the next year translation if currency value is favorable.
Q3 Video Go to the Association of Southeast Asian Nation (ASEAN) YouTube website:
https://www.youtube.com/channel/UCOp9ttykdbVr6MEkLJ4ZaJQ Select any ASEAN recording and post a substantive discussion describing the contents of the video and what you learned from the information on the organization and its work. Please include the URL to the video in your discussion post.
Respond to any one of your classmates on the information they've posted about their video for a total of two (2) posts
Q4 Comment to: PN
The video that chose was related to the awareness for nature. Many students from Indonesia prepared projects about the loss of biodiversity due to consequences related to the economy. As it is well known plants and other heavy machineries release gases to the atmosphere creating a hole to the atmosphere. The issue is that companies still are using obsolete method in the creation of products, which it brings a negative impact to nature. We all have seen how animals have gone instinct due to pollution and others factors. These students bring a better solution to keep the planet as breathable as possible for future generations to come.
Specially in undeveloped countries where companies know that big advantage of creating assets that produces profit, and also taking advantage from cheap labor. In India for example where the amounts of companies have grown so fast in so little time.” Average annual productivity (total factor productivity) growth in industry has increased from -1.2% in the period 1997-2001 to 1.9% in 2002-2004; the average productivity growth in services during the same period increased from 2.8% to 3.0%. Since 2003about 50% of the jump in growth, from 5%-6% to nearly 8%, is attributable to productivity growth” (Ray, 2011). The nature most of the time pays a high price due to companies which the only intention is to generate profits and leave behind a complete disaster. The video shows how to become aware of this things, and invites the young generation to step forward in the nature’s favor.
Q5 PP