00:02
Let us see each and every question and first question is here we know how to risk our distinct uncertainty considers and the option, correct option is d which is quantitative approach.
00:18
See risk is a distinct uncertainty and it is analyzed, used a quantitative approach and what is quantitative approach? it is a approach involves assessing risk based on non -numerical factors such as expert judgment and historical experiences and subjective evolutions.
00:42
So we can say that the correct option for this question is option number d which is quantitative approach.
00:49
Now come to the second part.
00:52
We have to recognize not a source of finance risk.
00:57
See so this in this our option number c is correct which is marketing risk.
01:04
Marketing risk is not typically considered a source of finance risk.
01:09
Finance risk primarily refers to uncertainty and potential losses associated with financial factors.
01:26
So we will say that our marketing risk is not a finance risk.
01:34
Now come to the third part.
01:37
Here our b option is correct which is international fletcher effect.
01:44
See the exchange rate equivalency model typically does not include the international fletcher effect.
01:51
However, it is important to note that term international fletcher effect is not a recognized concept or term in the field of finance or economics.
02:02
It seems to be incorrect or unfamiliar term.
02:05
So the answer is option number b.
02:10
Let us come to the fourth part.
02:15
See interest risk, interest rate risk refers to potential for changes in interest rates to affect the value of investments, cash flows or cost of borrowing.
02:40
It primarily affect entities that have exposure to interest bearing instruments or contracts.
02:46
So in this in this question our a option is correct which is ordinary shareholders.
02:59
See now come to the next part.
03:02
Here exchange rate risk refers to the potential for changes in exchange rates to impact the value of transaction involving different currencies.
03:18
And here if we talk about option number a which is transposition risk.
03:25
Transposition risk is not a recognized term.
03:30
Here we will use black pen c.
03:39
Transposition risk not recognized and not relation to exchange rate risk.
03:44
The other option economic risk, transaction risk and translation risk all are relevant and recognized expect of exchange rate risk.
03:55
Now come to the sixth part.
03:58
So here hedging techniques are used in financial risk management to mitigate the potential impact of adverse price or rate movements.
04:07
They involve taking position in derivative instruments to offset potential losses.
04:13
So if we talk about the correct answer here foreign exchange options forward contract this is the correct answer.
04:21
See foreign exchange option forward contracts are not hedging techniques and options contracts provide the holder with the right but not the obligations to buy or sell a currency at a specific price within a specified period.
04:44
While options can be caused for speculation or risk management they are not typically considered as direct hedging instruments...