国际会计第七版英版课后答案(第十一章).doc

Chapter 11 Financial Risk Management Discussion Questions Enterprise risk management assesses individual risks in the context of a firm’s business strategy. Risks are viewed from a portfolio perspective with risks of various business functions, e.g., FX risk, interest rate risk, political risk and the like, being coordinated by a senior financial manager responsible for keeping top management apprised of critical risks that could interfere with the accomplishment of a firm’s strategic objectives and devising risk optimization strategies. The variables that management accountants must track include factors both external and internal to the firm and varies from company to company. Market risk refers to the risk of loss due to unexpected changes in the prices of currencies, interest rates, commodities, and equities. It is not confined to price changes. Market risk also includes liquidity risk, market discontinuities, credit risk, regulatory risk, tax risk, and accounting risk. An example of a foreign exchange risk is a situation where an exporter invoices a credit sale to a foreign importer in foreign currency and foreign currency devalues prior to payment. An FX risk management program includes the following processes: Forecasting the expected movement in the relation between the yuan and your domestic currency. Measuring on a periodic basis your firm’s exposure to fluctuations in the value of the yuan. Designing protection strategies that will minimize losses should the yuan revalue. Establishing internal controls to measure your performance in hedging the risk of loss from changes in the value of the yuan. Translation exposure measures the impact of exchange rate changes on the domestic currency equivalents of a firm s foreign currency assets and liabilities. It is primarily concerned with currency restatement. Transaction exposure measures the cash flow impact of fluctuating currency values on the settlement of commercial transact