Copyright © 2007 Pearson Addison-Wesley. All rights reserved. Copyright © 2007 Pearson Addison-Wesley. All rights reserved.
Chapter 12
Copyright © 2007 Pearson Addison-Wesley. All rights reserved. 1-2
Operating Exposure
•
Operating exposure
, also called
economic exposure
,
competitive
exposure
, and even
strategic exposure
on
occasion, measures any change in the
present value of a firm resulting from
changes in future operating cash flows
caused by an unexpected change in
Copyright © 2007 Pearson Addison-Wesley. All rights reserved. 1-3
Attributes of Operating
Exposure
• Measuring the operating exposure of a firm requires
forecasting and analyzing all the firm’s future individual transaction exposures together with the future exposures of all the firm’s competitors and potential competitors
worldwide.
• From a broader perspective, operating exposure is not just the sensitivity of a firm’s future cash flows to unexpected changes in foreign exchange rates, but also to its sensitivity to other key macroeconomic variables.
