Research paper – Explain what exchange rate risk is
As a member of the finance team for an MNC, GBATT, you’ve been tasked by the CFO with monitoring the value of the currency used in foreign and domestic spending. The CFO asked you to provide some possible strategies to hedge against exchange rate risk.
Research strategies utilized to hedge against exchange rate risk. Then, based on your assigned readings and additional research, do the following:
- Explain what exchange rate risk is and how it may affect international firms.
- Identify three exchange rate hedging strategies and explain how GBATT could use them to help manage risks associated with exchange rates.
- Provide some real-world examples of firms employing these strategies, citing sources to support your position.