Exchange rate risk

Exchange rate risk, also known as currency risk, is the financial risk arising from fluctuations in the value of a base currency against a foreign currency in which a company…

Exotic currency

A currency that is thinly traded and highly illiquid is commonly called an exotic currency. The label ‘exotic’ has nothing to do with the location or size of the country…

Exotic Options

Exotic options are option contracts that include more complex features than the more commonly traded vanilla options. Due to their complex nature, exotic options are not the most suitable products for…

Fair value hedge

A fair value hedge is an investment position taken by a company or an investor aiming to protect the fair value of a specific asset, liability or unrecognised company commitment…

Federal Reserve Wired Network (FEDWIRE)

Fedwire is the abbreviation for the Federal Reserve Wire Network, a real-time gross settlement (RTGS) funds transfer system that settles funds electronically between any of the United States banks registered…

Financial Accounting Standards Board (FASB)

The Financial Accounting Standards Board is an independent, non-profit organisation consisting of a government body of 7 members, whose main purpose is to issue and communicate the generally accepted accounting…

Financial Conduct Authority (FCA)

The Financial Conduct Authority (FCA) is a United Kingdom regulatory body that focuses on the regulation of financial services firms (retail and wholesale). It is funded by membership fees it…

Financial statement translation

Financial statement translation is a corporate accounting process by which a parent company converts a foreign entity’s financial statements into its reporting currency to prepare consolidated financial statements. Accounting standards require…

Fintech

Fintech – a contraction of “finance” and “technology” – refers to financial service firms whose product or service is built on technology, often resulting in highly innovative, pioneering services The fintech…

Fintech companies

Fintech companies provide financial services using technological innovation. The rise of Fintech was made possible by the convergence of technological development and changes in financial regulation. Fintech companies essentially offer alternatives…

Fixed exchange rate

A fixed exchange rate is a system in which one currency is pegged to another (usually stronger) currency. Most of these currencies are pegged to the euro, the US dollar…

Flexible forward

A flexible forward is a type of forward contract used to hedge against the volatility generated by foreign exchange. More info FX Forwards

Flexible Hedging Strategy

A flexible hedging strategy is a method designed to allow companies to minimise the impact of adverse currency fluctuations on an ongoing basis. By contrast, more traditional hedging practices require…

Floating exchange rate

A floating exchange rate system determines a currency’s value in relation to other currencies. Unlike fixed exchange rates, these currencies float freely, that is, unrestrained by government controls or trade…

Foreign currency measurement

Foreign currency measurement is the accounting method used by an organisation to measure foreign transactions in their functional currency. International businesses that pay suppliers in foreign currencies and/or sell their…