FIN 406 Demonstrate comprehensive knowledge of exchange rate systems and the interaction between exchange rates, interest rates and inflation – Assignment Solution
You are required to provide a critical analysis of the following question in 1000 words. Use evidence and recent research results to support your answer. You should refer to the wider literature and real-life examples. Should companies hedge their exposures to foreign exchange risk? Discuss both views critically and state your recommendation. Use relevant research results to support your answer. In this assessment, the following learning outcomes will be covered: LO 1. Demonstrate comprehensive knowledge of exchange rate systems and the interaction between exchange rates, interest rates and inflation LO 2. Appreciate the types of risks faced by investors and multinational companies LO 3. Apply and critically evaluate alternative techniques for managing foreign exchange risks Answer: