Business operations are exposed to different types of risks because of uncertainty. Successful business management must ensure proper safeguard and cover against such potential risks. Some risks may be small and hamper the business operations for some time. Other risks may be very big and may destroy the company or change its course forever. Typically, a company may face several [...]
In this article we will discuss about the cost and types of hedging adopted by companies to mitigate exchange rate risk. Cost of Hedging: Companies use contractual and non-contractual methods to hedge exchange rate risk. Transaction exposure is hedged through contractual and non-contractual methods. Translation exposure can be hedged through contractual methods. Operating exposure is difficult to hedge given the [...]
Systematic risk can be measured using beta. Stock Beta is the measure of the risk of an individual stock in comparison to the market as a whole. Beta is the sensitivity of a stock's returns to some market index returns (e.g., S&P 500). Basically, it measures the volatility of a stock against a broader or more general market. It is [...]