Question

Managing economic exposure applications

a.Describe one financial method for managing economic-exposure

b.Describe one nonfinancial method for managing economic-exposure

c.Who can use the detailed method for determining economic exposure and who can use the regression based method for determining economic exposure?  Why?

Answer 1

a)

DIVERSIFYING FINANCING

A company can have access to capital markets in a number of major regions. This enables the company to gain flexibility in raising capital in the market with the cheapest cost of funds.

b)

Political stability and Market interventions by the host government can be some no financial methods

c)

Detailed method of economic exposure can be used by multinational companies working global and it can be also used to make decisions by the domestic stakeholders and investors.

So in short every company can use detailed economic exposures which can help maintaining better financial statements, cash flows and can check the foreign exchange volatility also.

regression based metod can be used where corelational comparisions and location fluctuations matter a lot like companies operating in different locations with variable changes in foreign exchanges and interest rates.