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EXCHANGE RATE EXPOSURE MANAGEMENT AND EFFICIENCY OF THE MARKETS INSIGHTS AND IMPLICATIONS

EXCHANGE RATE EXPOSURE MANAGEMENT AND EFFICIENCY OF THE MARKETS INSIGHTS AND IMPLICATIONS The issue of exposure management, a significant subset of international financial management, is closely intertwined with the notions of foreign exchange risk and exchange market efficiency. Since value is a function of risk, that makes an understanding of these notions germane to those who seek value in global markets. This study finds earlier attempts specifying exchange market efficiency inadequate and those dealing with foreign exchange risk deficient in generating prescriptions for exposure management. The paper focuses on the notion of the market hierarchy goods, financial and foreign exchange and the interrelationships among the markets. It helps the reader understand the theoretical constructs underlying prevailing schemes for foreign exchange exposure management. Most importantly, it identifies situations under which exposure management is relevant and potentially rewarding. It also points out circumstances when existing dictates for management will yield benefits only by accident. The paper offers some specific alternative suggestions to guide managers in making informed and logical decisions. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Managerial Finance Emerald Publishing

EXCHANGE RATE EXPOSURE MANAGEMENT AND EFFICIENCY OF THE MARKETS INSIGHTS AND IMPLICATIONS

Managerial Finance , Volume 17 (5): 9 – May 1, 1991

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
0307-4358
DOI
10.1108/eb013683
Publisher site
See Article on Publisher Site

Abstract

The issue of exposure management, a significant subset of international financial management, is closely intertwined with the notions of foreign exchange risk and exchange market efficiency. Since value is a function of risk, that makes an understanding of these notions germane to those who seek value in global markets. This study finds earlier attempts specifying exchange market efficiency inadequate and those dealing with foreign exchange risk deficient in generating prescriptions for exposure management. The paper focuses on the notion of the market hierarchy goods, financial and foreign exchange and the interrelationships among the markets. It helps the reader understand the theoretical constructs underlying prevailing schemes for foreign exchange exposure management. Most importantly, it identifies situations under which exposure management is relevant and potentially rewarding. It also points out circumstances when existing dictates for management will yield benefits only by accident. The paper offers some specific alternative suggestions to guide managers in making informed and logical decisions.

Journal

Managerial FinanceEmerald Publishing

Published: May 1, 1991

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