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difference between terminal values and instrumental values

Category: Business Paper Type: Homework Reference: APA Words: 1500

Fluctuation in exchange rates cause great problems for the company in terms of financial losses. For instance, exchange rates on June 11, 2014 indicate that Alliance needs extra 867.20 Canadian dollars to purchase the equipment. Alternative solutions: As the case, discuss about the fluctuations in the prices in dollar and Canadian currency. When the Canadian currency is paid it creates certain type of the risk that how to resolve such situation. Such situation creates risk and how to mitigate certain type of risk is to apply certain type of mitigating such fluctuations. There are two options to resolve such problem first is swaps and other is call put options. In the first option swap the same exchange rates is decided for the predetermined time and same currency is exchange when the contract is made. In call option, the buyer has the right to gain the agreements in their control and have no obligations to purchase that type of goods. On the other hand, put options the seller has the right to sell the goods without any obligations paid to the buyer. The buyer has to follow the regulations of the seller but not according to law. In accordance with the case, there are certain risk mitigation strategies of fluctuation in exchange rates. By involving the customer interaction in the agreement, recognize collaboratively work together. In this case, the final charges are paid by at the time of project completion. In internal change process that cash management and procurement of equipment all are revise to gain the opportunity in the internal processes. The completion time of the project are derived the schedules and business activities to mitigate the risk at the operations of the company. In deriving the foreign exchange services is used to reduce the charges of when Canadian currency is converted into dollar currency. When currency is transferred, it is immediately converted into dollars, as before send to the supplier, not to the currency fluctuation at the meantime. There is one another alternative of such risk mitigation of exchange rate of buying forwards foreign currency exchange at the current time value. This will reduce the risk mitigation of future increase value of dollars. This technique is used to prevent the risk that is occurred in the future predicted values.

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