Managerial Finance: Volume 4 Issue 2

Exchange Rates and the “New” International Monetary Order

Christopher Pass

In the past few years there has been a radical transformation of international monetary relations. Since 1973 a large number of countries have abandoned the Bretton Woods system…

What is Foreign Exchange‐Risk?

David P. Walker

The controversy between the “accounting” (“translation” or “balance‐sheet”) and the “economic” (“cash‐flow”) approaches to exchange‐risk is examined. The latter approach is…

Alternative Strategies for Managing Foreign Exchange Risk

Gunter Dufey, David P. Walker

This essay analyses alternative strategies for a firm to deal with exchange risk. “Profit maximising” and “risk minimising” strategies are examined as extreme alternatives. The…

The Forward Rate as an Accurate Predictor of Future Spot Rates

Brian Kettell

Corporate treasurers, in managing their foreign currency payables and receivables, are continually forced to decide whether to deal forward or to wait and to deal spot in the…

To What Extent Can Forecasters “Out‐Predict” The Forward Markets: The Track Record of Forex Research

B.C.J. Hesketh

With the introduction of a much more flexible exchange rate “system” in the 1970s, the need to predict currency movements has become an increasingly important preoccupation of the…

Is Forward Exchange Control Necessary?

Dean A. Paxson

The national objectives of forward exchange controls are to restrain speculation in foreign exchange, to limit international capital flows and to affect the forward exchange…

Exchange Control Restriction on UK Resident Companies—Description and Critique

Thomas W. McRae

Companies resident in the United Kingdom suffer from a very tight set of restrictions on exchange control. The rules regarding trading are quite different from those applied to…

Taxation and Foreign Exchange Management

John Parkinson, David P. Walker

There is a wide variety of actions which management may take in order to cope with the effects of possible movements in exchange rates. The choice of which action to take must be…

International Portfolio Diversification

Stephen F. Witt

The potential gains available from diversifying security holdings internationally (as opposed to merely nationally) are examined. A theoretical framework is developed illustrating…