Research Paper on:
Canada and Financial Risk

Unformatted Sample Text from the Research Paper:
on include trance action exposure; translation exposure and economic exposure. Transaction exposure involves the extent to which income from transactions is impacted  by currency fluctuations; translation exposure focuses on impact of currency exchange rates on consolidated results and balance sheets; while economic exposure involves the effect of changing exchange rates on future  prices. Transaction One way in which transaction exposure can be minimized, at least in the private sector, is to rely on hedging  techniques in order to avoid having to pay fluctuating exchange rates (Anonymous). Hedging would involve converting currency into a more stable rate, with the idea that the stable rate would  be stronger than a fluctuating exchange rate (Anonymous). In other words, our Canadian company, and an attempt to minimize transaction exposure, would  work to convert foreign currency that is unstable into a more stable currency, at least on the balance sheet. For the most part, that conversion would involve the movement  into Canadian currency -- however, given a wide fluctuations of the Canadian dollar as of late, the Canadian dollar may not necessarily be the most stable in the company can  use. In this way however, hedging and conversion means less impact on profits because of volatile exchange rates. Translation Translation exposure  occurs because the potential impact as financial data from other countries is translated to the home currency (South-Western College). This can cause some confusion -- as exchange rate movements can  happen dire impact on currency (South-Western College). Again, experts recommend hedging to reduce translation exposure (South-Western College). Forward contracts for example, means the risk of currency fluctuations is