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Friday 5 April 2013

IF-Diff bet transaction and economic exposure


Diff bet transaction and economic exposure
Transaction exposure
• Contract specific                              
• Cash flow loss can be easily computed
• Co’s do have policies to cope up with it
• Duration is same as time period of contract
Economic exposure
• General relates to entire investment.
• V difficult to compute opportunity losses.
• Do not have any policies to cope up.
• Relatively longer duration

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