Investor Glossary-exchange rate riskInvestor Glossary-exchange rate riskInvestor Glossary-exchange rate riskInvestor Glossary-exchange rate riskInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Exchange Rate Risk

The HTML to link to this page
 

Exchange rate risk is the risk that a position will become less valuable as a result of foreign exchange rate fluctuation. Exchange rate risk is also called currency risk. Companies that do business internationally face considerable exchange rate risk given the time it may take for an order to be filled and the receivable paid. Known and anticipated corporate exchange rate risk can be managed through currency options, forwards, and swaps. An investor is exposed to exchange rate risk, too, when investing abroad. Major banks engage in considerable hedging to manage exchange rate risk through active trading of over the counter currency options. Speculators can profit considerably from a willingness to take on exchange rate risk, such as when George Soros famously bet on the fall of the British pound in 1992, earning a profit of $1billion.



Rate this exchange rate risk definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: inflation, EBITDA, average price per share, current ratio, FTSE, 1035 exchange, LIBOR, annual return, deferred revenue, option premium, 401a, command economy, open position, real GDP, implied volatility, in escrow, quality assurance, cancelled check, dividends payable, covered put, stock split, 1031 exchange, class C shares, required rate of return, ex-dividend, limit order, risk management, Zero Cost Collar, reverse mortgage, minority interest, VIX, deferred tax, Key Rate Duration, margin rate, wholly-owned subsidiary, APR, 144a, diluted share, stock market close, FICO score, ex-dividend date, phantom income, per diem, debt service coverage, balance sheet, retained earnings, irrevocable trust, labor relations, liquidity ratio


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Home | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2016 Investor Glossary - All rights reserved - Terms of Use