currency risk to which the PPP Group was exposed. The paper also considers their options for currency risk management, in particular evaluating how PPP Group can manage their translation exposure risk.

Types of Currency Risk

The PPP Group's international transactions subject the firm to currency risk or exchange rate risk which arises with the potential change in the exchange rate of EUR against USD. The PPP Group is exposed to three kinds of currency risk that must be managed: transaction risk, translational rick and economic risk. Transaction risk is associated with the time delay that occurs between PPP Group's entering into contracts to purchase paper supplies and the actual contract settlement. PPP Group is also exposed to translation risk which the is the risk of adverse effects on their financial statements, possibly affecting the company's assets, liabilities, equities or income, due to changes in currency exchange rates. PPP Group is...
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