tailieunhanh - Lecture International finance: An analytical approach (3e): Chapter 12 - Imad A. Moosa

Chapter 12 - Foreign exchange risk and exposure. In this chapter, the learning objectives are: To define risk and exposure; to elaborate on the concept of value at risk (VAR); to distinguish among transaction, economic and translation exposure; | Chapter 12 Foreign Exchange Risk and Exposure Copyright 2010 McGraw-Hill Australia Pty Ltd PPTs t/a International Finance: An Analytical Approach 3e by Imad A. Moosa Slides prepared by Afaf Moosa Objectives To define risk and exposure To elaborate on the concept of value at risk (VAR) To distinguish among transaction, economic and translation exposure 12- Copyright 2010 McGraw-Hill Australia Pty Ltd PPTs t/a International Finance: An Analytical Approach 3e by Imad A. Moosa Slides prepared by Afaf Moosa Definitions of risk The chance of bad consequence, loss, etc. (The Concise Oxford Dictionary) The possibility of loss, injury, disadvantage or destruction (Webster’s Dictionary) 12- (cont.) Copyright 2010 McGraw-Hill Australia Pty Ltd PPTs t/a International Finance: An Analytical Approach 3e by Imad A. Moosa Slides prepared by Afaf Moosa Definitions of risk (cont.) The origin of the word ‘risk’ is either the Arabic risq or the Latin risicum 12- (cont.) Copyright 2010 McGraw-Hill Australia Pty Ltd PPTs t/a International Finance: An Analytical Approach 3e by Imad A. Moosa Slides prepared by Afaf Moosa Definitions of risk (cont.) In finance, a distinction is made between risk and uncertainty In finance, risk is measured by the dispersion around the mean value of the rate of return, the cost of borrowing, the value of assets and liabilities, etc. 12- Copyright 2010 McGraw-Hill Australia Pty Ltd PPTs t/a International Finance: An Analytical Approach 3e by Imad A. Moosa Slides prepared by Afaf Moosa FX risk FX risk arises because of uncertainty about the future spot exchange rate It refers to the variability of the domestic currency value of certain items resulting from the variability of the exchange rate 12- Copyright 2010 McGraw-Hill Australia Pty Ltd PPTs t/a International Finance: An Analytical Approach 3e by Imad A. Moosa Slides prepared by Afaf Moosa Rate of return 12- Copyright 2010 McGraw-Hill Australia Pty Ltd PPTs t/a | Chapter 12 Foreign Exchange Risk and Exposure Copyright 2010 McGraw-Hill Australia Pty Ltd PPTs t/a International Finance: An Analytical Approach 3e by Imad A. Moosa Slides prepared by Afaf Moosa Objectives To define risk and exposure To elaborate on the concept of value at risk (VAR) To distinguish among transaction, economic and translation exposure 12- Copyright 2010 McGraw-Hill Australia Pty Ltd PPTs t/a International Finance: An Analytical Approach 3e by Imad A. Moosa Slides prepared by Afaf Moosa Definitions of risk The chance of bad consequence, loss, etc. (The Concise Oxford Dictionary) The possibility of loss, injury, disadvantage or destruction (Webster’s Dictionary) 12- (cont.) Copyright 2010 McGraw-Hill Australia Pty Ltd PPTs t/a International Finance: An Analytical Approach 3e by Imad A. Moosa Slides prepared by Afaf Moosa Definitions of risk (cont.) The origin of the word ‘risk’ is either the Arabic risq or the Latin risicum 12- (cont.) Copyright .