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Factors Affecting Firm’s Degree of Transaction Exposure Name: Course: Convener: Institution: Date: Abstract Companies especially multinational companies are now exposed to risks caused by unexpected movements in exchange rate. With globalization and liberalization being adopted by almost all countries scope as well as sphere of international business has become much larger. The high volatility of exchange rates is a fact of life faced by every company engaged in international business bringing in uncertainties in their bottom line. The management of foreign exchange risk has become essential for the survival of companies in today’s volatile financial markets. Enterprises involved in international business face transaction exposure to foreign exchange risk. This type of exposure occurs when an enterprise trades borrows or lends in foreign currency. Transaction exposure has a direct effect on an enterprise’s financial position and profitability. It is one of the three forms of exposure to exchange rate fluctuations Business and Economics 17(4) 46. Ma C. K. & Kao G. W. (1990). On exchange rate changes and stock price reactions. Journal of Business Finance & Accounting 17(3) 441-449. Rupeika-Apoga R. & Nedovis Uraev R. (2015). The Foreign Exchange Exposure of Non-Financial Companies in Eurozone: Myth or Reality. International Journal of Economics and Business Administration 3 (1) 54-66. Stamenovic M. Cvetkovski T. & Primorac D. (2016). CHALLENGES IN FORECASTING EXCHANGE RATES BY MULTINATIONAL CORPORATIONS IN GLOBAL FINANCE ERA. Economic and Social Development: Book of Proceedings 393. Treviño L. J. & Mixon F. G. (2004). Strategic factors affecting foreign direct investment decisions by multi-national enterprises in Latin America. Journal of world business 39(3) 233-243. Appendix C Niclas Hagelin and Bengt Pramborg (2004). Hedging Foreign Exchange exposure: Risk Reduction from Transaction and Translation Hedging. Journal of International Financial Management and Accounting 15:1 2004. Prof. Gordon Bodnar. Corporate Exposure to Exchange Rates. [...]
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Subject Area: Business
Document Type: Thesis Statement
