Define the different types of exposure the firm might encounter.

Transaction exposure occurs when a company has foreign currency-denominated transactions that are exposed to exchange rate risk. This type of exposure can arise from sales and purchases denominated in a foreign currency, such as exports/imports, dividends payments, capital expenditures or any other activity where there is an obligation to transfer funds among different countries. Transaction exposure can lead to potential losses when converting the foreign currencies back into the home currency due to changes in the exchange rates.

Economic exposure measures how much a firm’s market value is affected by unexpected fluctuations in exchange rates. It occurs when firms have investments (such as fixed assets) abroad and those currencies appreciate or depreciate relative to their local counterpart. A rise on the foreign currency means profits for the firm while it can cause losses if it drops significantly. Economic exposure also refers to longer-term structural risks that affect long run cash flows for multinational firms.

Translation exposure refers to accounting effects caused by revaluing assets and liabilities which are denominated in a second currency for year end financial reports into one unit of measure – usually home country\’s base currency i.e., balance sheet items (typically noncash earn entries like accounts payable receivable) affected with restatements resulting varying exchange rate movements versus previous time periods if find oneself within position assessing need understand fully concept & apply appropriately given scenarios too!

The relationship between these three types of exposures arises from their effect on companies’ operations: transaction exposures relate directly to cash flow activities; economic exposures refer international asset holdings likely reflecting competitive strength ones industry sector; lastly translation one affects financial results reported shareholders stock exchanges investors public view form after all so always good idea pay close attention here especially potentially misleading numbers could lead wrong assumptions being made…

Financial contracts such derivatives forward options swaps etc associated with each particular kind listed above because used manage risks greater extent limit losses gains expected accordingly whether short term objectives terms going far future ‘hedging strategies’ adopted realize better outcomes intended goals set forth earlier might achieved now given information above one quickly able make sound decisions based upon concrete facts evidence presented during process itself then carefully next steps taken sure everything remains track progress towards achieving objective. Operational techniques available involve analyzing current situation based past performance seeking expert advice developing strategy implementing same properly conducting periodic review sessions seeing hindsight success measured been case action plan employed correctly course but only way know surety all comes how going handle things immediately forthcoming opportunities come knocking door take them provided they align closely desire should were initially postulated … https://corpgov.law.harvard.edu/2015/08/28/the-three-types-of-currency-exposure/, https://www2.deloitte.com/content/dam/Deloitte/global/Documents/FinTech%20GAKV%20BrowseByIndustryApproach_20181003_FullReport3b78f7277399d29128c8175a0a89140c1v4i914y4h358jlj32fm1141epabnbsmw5fo6uk5sfmpoumijtgptftzsieafnmuczr93usivkycnp6xvpqq7–Exhibit6D&EFinal31July19msbpubmedium15715030871171349488906483133185425746068314801273920734690026596464517977551120221372167724450568248457889533884609420310310666863306gq392okdp4798767474kkehlgtiiuqvosizrx556bfxngcbufcv2lwrkbintlia378085293extvmwpbbasp843606352121007160025625909055994831627547304