FMF9

Syllabus G1/2. Nature and types of risk management 1 / 3

G1a) Describe and discuss different types of foreign currency risk:
i) translation risk
ii) transaction risk
iii) economic risk

G2a) Describe the causes of exchange rate fluctuations, including:
i) balance of payments 
ii) purchasing power parity theory
iii) interest rate parity theory
iv) four-way equivalence

b) Forecast exchange rates using:
i) purchasing power parity
ii) interest rate parity

c) Describe the causes of interest rate fluctuations, including: 
i) structure of interest rates and yield curves
ii) expectations theory
iii) liquidity preference theory
iv) market segmentation
Nature and types of risk management