Pre-transaction risk and Preference shares: Difference between pages

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imported>Doug Williamson
(Expand to deal with multiple export markets.)
 
imported>Doug Williamson
m (Spacing 21/8/13)
 
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''Foreign exchange risk management''
A form of capital with preferred rights over ordinary shares or common stock. 


1.
These rights may be a preferred right to a dividend or to repayment in the event of winding up of the business.


Pre-transaction foreign exchange risk arises from needing to commit to a price before actually entering into transactions or commercial agreements.
This form of capital can have some characteristics of debt and of equity.  As such they could be a form of hybrid instrument.


For example, an exporter may need to publish price lists in the currencies of its customers' local markets.
Preference shares are frequently used by venture capital investors as a medium for their investment.
 
Pre-transactional currency exposure also exists when an organisation tenders for a contract priced in a foreign currency, or where there are associated foreign currency costs, for example for materials, labour or other operational inputs.
 
Some practitioners do not identify pre-transaction risk as a separate class of risk, rather considering it to be a shorter-term type of economic exposure.
 
 
2.
 
The same as Contingent risk as applied to currency management.
 
 
Also known as pre-transactional risk, pre-transaction exposure or pre-transactional exposure.




== See also ==
== See also ==
* [[Contingent risk]]
* [[Common stock]]
* [[Currency risk]]
* [[Ordinary shares]]
* [[Economic risk]]
* [[Venture capital]]
* [[Foreign exchange risk]]
* [[Translation risk]]
* [[Transaction risk]]
 
[[Category:Manage_risks]]

Revision as of 13:08, 21 August 2013

A form of capital with preferred rights over ordinary shares or common stock.

These rights may be a preferred right to a dividend or to repayment in the event of winding up of the business.

This form of capital can have some characteristics of debt and of equity. As such they could be a form of hybrid instrument.

Preference shares are frequently used by venture capital investors as a medium for their investment.


See also

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