Question 2d
Examiners Report

Candidates were asked here to briefly discuss three internal methods of managing foreign currency transaction risk.

Internal methods of managing foreign currency transaction risk such as leading and lagging, invoicing in one’s own currency, netting, matching receipts and payments, and matching assets and liabilities should be considered before an organisation turns to external methods of managing foreign currency transaction risk such as forward contracts, money market hedging, currency futures, currency options and currency swaps.

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