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Week 5 Dq Fin370

In: Business and Management

Submitted By ameshiagoss25
Words 394
Pages 2
What is meant by foreign exchange risk? Currency risk is a form of risk that arises from the change in price of one currency against another. Whenever investors or companies have assets or business operations across national borders, they face currency risk if their positions are not hedged.

What specific problems does foreign exchange present in an organization? Effects foreign exchange fluctuations and its Impact on the business
The organisation is put to exchange risk. This means that for the same product, if a business contracts with seller for a specific amount due to rate fluctuations, that will be paying more. The customs duty structure, VAT etc are directly linked to such rates which will have further impact. Cash outflow also increases thereby straining the working capital requirements. In short, this directly affects the profitability of a project/business.

How may an organization that needs Euros in 6 months protect itself from currency fluctuations?The Best and most widely used methods for currency fluctuation protection is paying prepaid premium.

What is globalization? Globalization is the process of international integration arising from the interchange of world views, products, ideas, and other aspects of culture.Put in simple terms, globalization refers to processes that increase world-wide exchanges of national and cultural resources. Advances in transportation and telecommunicationsi nfrastructure, including the rise of the telegraph and its posterity the Internet, are major factors in globalization, generating further interdependence of economic and cultural activities.

Why has globalization become so important during the last 10 years? Gobalization has become all the more important in last decade as the technological advances have made easier for people to travel, trade, communicate and do business internationally.Two major recent...

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