
C H A P T E R
CHAPTER OBJECTIVES
5
Management of Foreign
Exchange Exposure and Risk
After studying this chapter, you should be able to:
1 Discuss the concepts of foreign exchange exposure and foreign exchange risk, and
understand how they are measured.
2 Define real exchange rate and nominal exchange rate from the perspective of foreign
exchange exposure.
3 Classify foreign exchange exposure into economic and translation exposures, and
understand how economic exposure can be further categorized into various types of
transaction and operating exposures.
4 Discuss the management of transaction exposure and highlight various hedging
techniques. ...