International commerce has rapidly increased as the Internet has provided a new and more transparent marketplace for individuals and entities alike to conduct international business and trading activities.
Significant changes in the international economic and political landscape have led to uncertainty regarding the direction of foreign exchange rates.
This uncertainty leads to volatility and the need for an effective vehicle to hedge foreign exchange rate risk and/or interest rate changes while, at the same time, effectively ensuring a future financial position.
Each entity and/or individual that has exposure to foreign exchange rate risk will have specific foreign exchange hedging needs.
Prepare a brief essay that discusses the most important factors associated with foreign exchange rate risk. In your essay, indicate why you feel this is a concern to you.