BUISENESS MANAGEMENT
RISK MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A type of contract used to buy and sell on the market
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Exchange rate risk management
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Payment risk management
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A type of contract used to assess risks
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Detailed explanation-1: -FECs are used as a hedge against risk as it protects both parties from unexpected or adverse movements in the currencies’ future spot rates when FX trading is otherwise unavailable.
Detailed explanation-2: -The main function of foreign exchange is to transfer money between countries. The foreign bill of exchange is the instrument normally used. The instrument most in use in foreign payments is the Telegraphic Transfer (T. T).
Detailed explanation-3: -Hedging Function: The third function of a foreign exchange market is to hedge the foreign exchange risks.
Detailed explanation-4: -A foreign exchange risk management strategy or program is a set of procedures that allows a company to achieve its goals in terms of managing currency risk. It is based on the business specifics of the company, including its pricing parameters, the location of its competitors, and the weight of FX in the business.