Exhibit 9.3 The Life Span of a Transaction Exposure Time and Events t t2 t3 ta Seller quotes Buyer places Seller ships Buyer settles A/R a price to buyer firm order with product and with cash in amount (verbal or written form) seller at price bills buyer of currency offered at time t1 (becomes A/R) quoted at time t1 Quotation Backlog Billing exposure exposure exposure Time between quoting Time it takes to Time it takes to a price and reaching a fill the order after get paid in cash after contractual sale contract is signed A/R is issued
Exhibit 9.3 The Life Span of a Transaction Exposure
Measurement of Transaction Exposure Foreign exchange transaction exposure can be managed by contractual,operating,and financial hedges. The main contractual hedges employ the forward, money,futures,and options markets. Operating and financial hedges employ the use of risk-sharing agreements,leads and lags in payment terms,swaps,and other strategies
Measurement of Transaction Exposure Foreign exchange transaction exposure can be managed by contractual, operating, and financial hedges. The main contractual hedges employ the forward, money, futures, and options markets. Operating and financial hedges employ the use of risk-sharing agreements, leads and lags in payment terms, swaps, and other strategies