《FIN Topic 6 Foreign exchange markets and risk management》.pptVIP

Module 3 Business International Financial Management In Module 3 we study in more detail the practical management of risk associated with international business operations. The module comprises three topic areas: Risk management associated with operating across different countries with different currencies where businesses are exposed to transactions risk(交易风险), operational risk（经营风险） and translations risk（折算风险） Risk management associated with financing operations（融资） across different countries and currencies. This relates to raising capital (both debt and equity)（债务融资、股票融资） and holding securities in the global economy. Foreign investment（对外投资）: direct investment in countries other than the business home country. Topic 6 Foreign exchange markets and risk management Chapter 11, 12 13. Compulsory reading Prescribed text: Eiteman et al. Chapter 11, 12 13. Recommended readings Online Reading 6.1: José Luiz Rossi Júnior (2011, January–February). Exchange rate exposure, foreign currency debt, and the use of derivatives: Evidence from Brazil. Emerging Markets Finance Trade, 47(1), 67-89. Objectives When you have finished studying this topic, you should be able to explain and describe: Transactional risk exposure 交易风险 Operations risk exposure 经营风险 Translation risk exposure 折算风险 The possible techniques that management might adopt to manage these risks The issues management has to weigh in deciding which of the various approaches it should adopt in managing these risk exposures. Chapter 11 Transaction Exposure Definition: The foreign exchange exposure (or risk) we are examining in this topic is the risk that the business will incur a reduction in the value of its cash flows, a drop in its profit or a change in its net worth（market value） as a result of changes in exchange rates when operating in international markets. Profits, cash flows, and market value, are the key financial elements of how we view the relative succe