Corporations today are operating in an environment in which exchange rate changes may adversely affect their competitive positions in the marketplace. This situation, in turn, makes it necessary for many firms to

Question

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In order to deal with the adverse effects that exchange rate changes can have on their competitive positions in the marketplace, corporations need to both carefully manage and measure their exchange risk exposure. Managing their exposure involves developing strategies and tactics to mitigate the risks that currency fluctuations can pose, such as hedging, diversifying operations, or adjusting prices. Measuring their exposure involves assessing the potential impact of currency fluctuations on various aspects of their operations, such as sales, costs, and profits, and identifying the most significant risks. Only by combining these two approaches can corporations effectively mitigate the negative effects of exchange rate changes and remain competitive in a global market.

Corporations Today Are Operating in an Environment in Which Exchange