Lecture Financial institutions, instruments and markets (6/e): Chapter 17 - Christopher Viney

Chapter 17 Foreign Exchange: Risk Identification and Management Copyright ª 2009 McGraw­Hill Australia Pty Ltd 17­1 Learning Objectives • Recognise FX transaction, translation, operational and economic risk • Formulate an FX policy document • Outline methods to identify a company’s FX exposures • Describe the implementation of market-based hedging techniques • Explain internal non-market-based techniques for managing FX risk Copyright 2009 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Institutions, Instruments and Markets 6e by Viney Slides prepared by Anthony Stanger 17-2 Chapter Organisation 17.1 FX Risk Policy Formation 17.2 Measuring Transaction Exposure 17.3 Risk Management: Market-based Hedging Techniques 17.4 Risk Management: Internal Hedging Techniques 17.5 Summary Copyright 2009 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Institutions, Instruments and Markets 6e by Viney Slides prepared by Anthony Stanger 17-3 17.1FX Risk Policy Formation • Foreign exchange risk exposures can be classified in terms of their impact on a firm’s cash flows, balance sheet, competitive position and value – Transaction exposure – Translation or accounting exposure – Operational exposure – Economic exposure Copyright 2009 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Institutions, Instruments and Markets 6e by Viney Slides prepared by Anthony Stanger 17-4 17.1FX Risk Policy Formation (cont.) • Transaction exposure – The risk that future foreign currency denominated cash flows will vary on account of exchange rate movements E.g. a contract to import goods from the US denominated in USD Copyright 2009 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Institutions, Instruments and Markets 6e by Viney Slides prepared by Anthony Stanger 17-5 ... - tailieumienphi.vn 1084992