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Translation, Transaction and Economic Exposure

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What are the different issues involved with translation exposure, transaction exposure and economic exposure? How can companies plan to mitigate the risk of each? What are the opportunity costs associated with measures to mitigate this risk?

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The major issue involved with translation exposure is that an organization's assets may decrease in value if there is a change in the exchange rate that is detrimental to that organization. Companies can plan to mitigate the risk of translation exposure by carefully monitoring the exchange rates and statistically calculating the probability of changes in the exchange rates in the future, and engaging in transactions more heavily when the exchange rates are more favorable for the organization. The major issue involved with transaction exposure is the fact that if the currency exchange ...

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International accounting questions

1 - Compare and contrast the terms translation, transaction, and economic exposure. Does FAS 52 resolve the issue of accounting versus economic exposure?

3. You are currently working for a consulting firm that provides risk management products for clients. You task is to provide your companies sales force with information on prospective clients. Assume that General electric corporation whose financial statements and notes appear at www.generalelectric.com is a prospective client.

a. using GE' 2003 financial statements and accompanying notes as a starting point identity as many exposures as you can that impact the company. Be sure to cross-reference your findings with the specific page number of the financial statement you are referring to.
b. Identify any exposures that the company is currently hedging

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