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I [type your full first names and surname here], declare that the contents of this dissertation/thesis represent my own unaided work, and that the dissertation/thesis has not previously been submitted for academic examination towards any qualification. Furthermore, it represents my own opinions and not necessarily those of the University.
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In this study we try to explore the concept of exchange rate risk in a holistic context. The main focus of the research is on currency or foreign exchange rate risk and its relation with a firm involved in exchange rates. The research also analyzes many aspects of exchange rate and tries to gauge its effect on a firm's value and performance. In order to find the stock price of the company, a regression analysis was run. The variables used are stock price, market value and earnings per share, with stock price being the dependent variable and market value and EPS being the independent variables. Finally the research describes various factors which are responsible for market value of a firm in relation to exchange rate risks.
TABLE OF CONTENTS
CHAPTER 1: INTRODUCTION1
Background of the Study1
Research Aims and Objectives2
Significance of the Study2
Validity and Reliability2
CHAPTER 2: LITERATURE REVIEW6
The Stock Market Approach to Measure Exchange Rate Risk18
Assurance of Exchange Rate Risks22
Avoid Risk Measures22
Risk Mitigations Measures22
CHAPTER 3: METHODOLOGY24
Mixed Method Research24
CHAPTER 4: DISCUSSION AND ANALYSIS28
Empirical evidence on the determinants of foreign currency derivative use….………..……29
Empirical evidence on the impact of corporate derivative usage on foreign exchange risk.29
CHAPTER 5: CONCLUSION42
Exchange Rate Risk and Corporate Value42
CHAPTER 1: INTRODUCTION
Background of the Study
This study focuses on exchange rate risks and its impact on the value of a firm. It provides an overview of the ways in which governments and policymakers implement exchange rate policy to control and stabilize national economies. The main types of exchange rate regimes, including floating exchange rate regimes, managed exchange rate regimes, and pegged exchange rate regimes, will be described. The issues associated with exchange rate management will be discussed.
Today's companies are facing a vast variety of risks in almost every aspect of their economic activities on a daily basis, which require to be carefully managed and tended to in order to secure the companies' future existence and profitability. In the past few decades, however, one risk in particular, and its management, have been and continue to be of major concern to the majority of enterprises - namely, foreign exchange rate risk. The collapse of the fixed exchange rates regimes in the 1970's and the followed adoption of floating exchange rates, as well as the steadily intensifying degree of globalisation in world's economy have significantly exacerbated the importance of managing and minimizing the exchange rate risks. The gradual reduction of trade restrictions such as tariffs and quotas, the internationalisation of modern ...