Critical examination of exchange rate changes on the financial Essay

Critical examination of deputize rate changes on the financial performance of Honda Motors - Essay ExampleHaving clearly outlined the risk attention framework for Honda as its financial strength pillar, it is important to highlight the limitations in achieving results with such policy initiatives. jibe to Guay and Kothari, there is a huge difference between the amount of money that a firm wants to hem in with derivatives, and the amount that it actually succeeds in hedging. In previous section, we discussed the relative importance of different hedging options for Hondas case. But, it is not an easy route as it is fraught with some practical limitations, which we shall study on an individualist case by case basis. 1.Continuing with financial instruments as primary safeguards Three major problems with financial instruments are inconsistency, asymmetry and indeterminacy. Inconsistency refers to the wide gaps in hedging schemes with a complicated web which female genitals make aud iting a difficult task. Asymmetry refers to the unreliable nature of the entries itself, and indeterminacy refers to the probability of fraudulent selective information entry. If these problems with financial instruments are not sorted out in the beginning itself, it could lead to a bulky financial disaster, the likes of Nick Leeson.