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There Are as Many Different Approaches to Exposure Management as There

question 12

Essay

There are as many different approaches to exposure management as there are firms and no real consensus exists regarding the best approach. Discuss the following theoretical dimensions to currency hedging: optimal hedge ratio, hedge symmetry, hedge effectiveness and hedge timing.


Definitions:

Randomizing

The process of making choices or selections in a way that is devoid of any pattern, enabling an unbiased outcome.

Court

A governmental institution authorized to resolve legal disputes.

Financial Economists

Specialists who study the ways in which money, financial instruments, and financial markets influence the economy.

Portfolio Management

The science and art of making decisions about investment mix and policy, matching investments to objectives, asset allocation, and balancing risk against performance.

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