Question Details

Kopetsky Co. has net receivables in several currencies 



1. Factors That Affect a Firm- Transaction Exposure. What factors affect a firm- degree of
transaction exposure in a particular currency? For each factor, explain the desirable characteristics
that would reduce transaction exposure.

2. Currency Correlations. Kopetsky Co. has net receivables in several currencies that are highly
correlated with each other. What does this imply about the firm- overall degree of transaction
exposure? Are currency correlations perfectly stable over time? What does your answer imply
about Kopetsky Co. or any other firm using past data on correlations as an indicator for the future?



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