From the perspective of a U.S. firm, FX business exposure is sensitivity of __________ with respect...
From the perspective of a U.S. firm, FX business exposure is sensitivity of __________ with respect to unexpected changes in FX rates.
The USD value of a single transaction, which is always the same as operating exposure
The USD denominated value of the firm’s business, often measured by enterprise value
The firm’s stock price, which is also called FX equity exposure
The USD denominated value of the firm’s total assets, often measured by equity exposure
Homework Answers
In this case the correct solution is the fourth option.
The above case relates to definition of transaction exposure. It measures the sensitivity of home currency with respect to value of assets and liabilities. This is denominated in foreign currency with respect to unanticipated changes in exchange rates.
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From the perspective of a U.S. firm, FX business exposure is
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