Chapter 9: Forecasting Exchange Rates
Problem 1 Page 295 & 296:
As I read in the chapter there are many reasons as to why corporations have motives for
forecasting exchange rates. For example, revenues and cost are some of the serious characterizes
that affect a corporation because of future exchange rates. Also, according to the chapter these
few examples I am about to talk about are the following corporate functions that typically require
exchange rate forecasts.
• Hedging decision
• Short-term investment decision
• Capital Budgeting decision
• Earning assessment
• Long-term financing decision
