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Exchange risk
Exchange riskThe variability of a firm's value that results from unexpected exchange rate changes, or the extent to which the present value of a firm is expected to change as a result of a given currency's appreciation or depreciation. RELATED TERMS-------------------------------------- Value The worth or desirability of something expressed as an amount of money. Results The profit (or loss) made by a company. Exchange A marketplace in which shares, options and futures on stocks, bonds, commodities, and indexes are traded. Firm 1) Refers to an order to buy or sell that can be executed without confirmation for some fixed period. 2) A synonym for company. Appreciation The economic value of a company both as a continuing going concern and as a resource converter. Includes consideration of net asset value, breakup value, liquidation value, and replacement cost. Depreciation A non-cash expense (also known as non-cash charge) that provides a source of free cash flow. Amount allocated during the period to amortize the cost of acquiring long-term assets over the useful life of the assets. SIMILAR TERMS-------------------------------------- Exchange A marketplace in which shares, options and futures on stocks, bonds, commodities, and indexes are traded. Exchange controls Government restrictions on the purchase of foreign currencies by domestic citizens or on the purchase of the local domestic currency by foreigners. Exchange distribution A sale on an exchange floor of a large block of stock in a single transaction. A broker bunches a large number of buy orders and sells the block all at once. Exchange fund Investment vehicle introduced in 1999 that appeals to wealthy investors with large holdings in a single stock who want to diversify without paying capital gains taxes. Exchange of assets Acquisition of another company by purchase of its assets in exchange for cash or stock. Exchange of stock Acquisition of another company by purchase of its stock in exchange for cash or shares. Exchange offer An offer by a firm to give one security, such as a bond or preferred stock, in exchange for another security, such as shares of common stock. Exchange privilege A mutual funds shareholder's right to switch from one fund to another within one fund family, usually at no additional charge. Exchange rate The price at which one currency can be exchanged for another one. Exchange rate mechanism (ERM) The methodology by which members of the EMS maintain their currency exchange rates within an agreed-upon range with respect to other member countries. Exchange rate risk Also called currency risk; the risk that an investment's value will change because of currency exchange rates. Exchange ratio The number of new shares in an acquiring firm that are given for each outstanding share of an acquired firm. Exchange Traded Funds (ETF) Similar to an index mutual fund, these tracking stocks trade continuously. Exchange, The A nickname for the New York Stock Exchange. Also known as the Big Board, where more than 2000 common and preferred stocks are traded. Exchangeable Applies mainly to convertible securities. Means the issuer, if so stated, may substitute a convertible debenture for an existing convertible preferred with identical terms. Exchangeable instrument Applies mainly to convertible securities. Bond or preferred stock that may be exchangeable into the common stock of a different public corporation. Exchangeable security Investment instrument that grants its holder the right to exchange it for the common stock of a firm other than the issuer of the instrument. PREVIOUS AND NEXT TERMS-------------------------------------- Exchange privilege A mutual funds shareholder's right to switch from one fund to another within one fund family, usually at no additional charge. Exchange rate The price at which one currency can be exchanged for another one. Exchange rate mechanism (ERM) The methodology by which members of the EMS maintain their currency exchange rates within an agreed-upon range with respect to other member countries. Exchange rate risk Also called currency risk; the risk that an investment's value will change because of currency exchange rates. Exchange ratio The number of new shares in an acquiring firm that are given for each outstanding share of an acquired firm. Exchange risk Exchange Traded Funds (ETF) Similar to an index mutual fund, these tracking stocks trade continuously. Exchange, The A nickname for the New York Stock Exchange. Also known as the Big Board, where more than 2000 common and preferred stocks are traded. Exchangeable Applies mainly to convertible securities. Means the issuer, if so stated, may substitute a convertible debenture for an existing convertible preferred with identical terms. Exchangeable instrument Applies mainly to convertible securities. Bond or preferred stock that may be exchangeable into the common stock of a different public corporation. Exchangeable security Investment instrument that grants its holder the right to exchange it for the common stock of a firm other than the issuer of the instrument. We thank you for using the Financial Dictionary to search for Exchange risk. If you have a better definition for Exchange risk than the one presented here, please let us know by making use of the suggest a term option. This definition of Exchange risk may be disputed by other professionals. Our attempt is to provide easy definitions on Exchange risk and any other medical topic for the public at large.
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