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The task is to review EuroJet's foreign exchange exposure
Finance & Accounting
Pages 14 (3514 words)
Foreign Exchange Risk Management and Risks Related to Expansion and Growth- A Case Study of Euro Jet [Student’s Name] [Course Title] [Instructor’s Name] [Date] Foreign Exchange Risk Management and Risks Related to Expansion and Growth- A Case Study of Euro Jet Introduction Euro Jet’s operations are spread to different parts of the Europe and the airline is the largest European airline in terms of seat-miles flown per annum.
In addition to this, as has been noted in the case study that the company plans to opt for one of the two options for expansion, which include expansion of network to intercontinental destinations and growth of existing network, the report also provides an evaluation of the risks associated with these two options in terms of foreign exchange risk and international environment risks. Besides this, a critical review of the literature pertaining to foreign exchange risk has been provided in the appendix at the end of this report. Management of Foreign Exchange Risk Having noted the fact that Euro Jet is faced with a risk of foreign exchange exposure due to fact that its revenues are earned under different currencies’ denominations, it is therefore pertinent to understand first that what is foreign exchange exposure risk and how it influences a company’s revenues. Moreover, the understanding of different risks and methods to manage them is likely to result in determining an approach which is more suited to the needs and requirements of Euro Jet. Foreign Exchange Exposure Risk The foreign exchange exposure risk refers to the expected gain or loss incurred due to fluctuations in the exchange rate (Arnold & Kumar, 2008; Moles et al., 2011). ...
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