Title: The Effects Of Foreign Exchange Risk On The Pricing And Marketing Of A Product In Foreign Markets
Abstract: The thesis of this paper is to determine how the foreign exchange risk affects the marketing and pricing of a product abroad. It is an attempt first to identify and measure possible losses or gains resulted from the fluctuation of exchange rates (foreign exchange exposure) and second, to suggest, possible means of managing the foreign exchange risk. This paper defines and discusses the different types of foreign exchange exposure (translation, transaction, and economic). Traditionally, hedging in the forward exchange market was recommended as a procedure of managing foreign exchange exposure. This paper proceeds to explain how foreign exchange exposure can also be covered through the pricing mechanism and develops formulas that estimate adjusted prices to reflect the foreign exchange risk.
Publication Year: 1986
Publication Date: 1986-01-01
Language: en
Type: article
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