Discuss and define exchange rate risk as presented in our textbook.

4. Discuss and define exchange rate risk as presented in our textbook.

Each question should be answered in at least 300 words. Quality of content and use of course and outside-of-course resources to support your position or analysis. The answers should not be in the form of essay, just straight to the point- Work must be original and cite your sources.

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Exchange rate is referred as the risk of investment’s value changing due to various changes in exchange rate of the currency. As a matter of fact, investors will be forced to close out a short or long position at loss in a foreign currency due to unfavorable moments in exchange rates. Thus, this is well known as exchange rate risk or currency risk (Huchzermeier & Cohen, 1996). There are different ways of reducing exchange…

APA

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