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- Of foreign exchange risks, what are differences between translation risk and transaction risk? Please offer a real-world example.What are forward contracts? How can they beused to manage foreign exchange risk?Discuss the condition under which exchange rate changes may actually reduce the risk of foreign investment.
- Explore the concept of arbitrage on the currency exchange markets and critically evaluate with examples.What term is used to describe the process of reducing foreign exchange risk? Choose the correct. A)international accounting B)exposure C)hedging D)harmonizationPurchasing an option to buy foreign currency at a predetermined exchange rate in order to reduce exchange risk is called: A)transfer pricing. B)hedging. C)translating. D)cross-listing.