Seven positions at a composite dryer maker, sorted into transaction, translation or economic exposure with a reason and a response for each, make up the GF584 Unit 2 exposure classification exercise. Searches like "gf 584 unit 2 assignment example", "gf584 unit 2 sample" and "gf584 unit 2 example" land here.
What a finished GF584 Unit 2 exposure classification exercise looks like
A classification grid of seven rows across about four pages, with columns for the item, amount, currency, label, reason and response, and a paragraph below each row. Clear cases come first. Dealer receivables of 14.2 million Australian dollars on 90-day terms, 9.40 million dollars at 0.6620, are transaction exposure. The Brazilian subsidiary's net assets of 310 million reais, 56.88 million dollars at 5.45, are translation exposure. The harder rows follow. Next season's Australian price list covers some 64 million Australian dollars of expected sales and is labeled economic until orders are booked. The won-indexed motor contract is labeled transaction despite its dollar invoices. An 18-million-dollar intercompany loan owed by the subsidiary would cost it 9.81 million reais if the real weakened 10 percent.
How a GF584 Unit 2 example is structured
Definitions open the exercise in three sentences each, framed by what moves and when: contracted cash flows in a foreign currency, accounting restatement of foreign net assets, and future operating cash flows exposed to rates through prices, volumes or competitors. The grid follows in order of difficulty, and each borderline row gets a paragraph weighing the two labels it could take. The price list is argued as economic because no dealer is obliged to buy, becoming transaction exposure order by order. The motor clause is argued as transaction because its price formula is contractual. The intercompany loan is split by entity: no exposure for the dollar-functional parent, a remeasurement exposure for the real-functional subsidiary. The last two rows, a German competitor and Brazilian farm demand, are economic. Each label is paired with its typical response in a final table.
Definitions keyed to what moves
Contracted cash, restated net assets and future operating cash flows are the three objects each label refers to, and every row is tested against them in that order.
A price list is not yet a receivable
Sixty-four million Australian dollars of expected sales stay economic exposure until dealers place orders, which is why a forward on the full amount would be premature.
Dollar invoices, won risk
The motor contract's reset formula makes its dollar price a function of the won, so the exercise labels it transaction exposure despite the currency code on every invoice.
One loan, two entities
Owed in dollars by a subsidiary keeping its books in reais, the 18-million loan is no exposure for the parent and a 9.81-million-real remeasurement risk per 10 percent move for the subsidiary.
Farm demand that offsets
Brazilian growers paid in dollar-linked soybean prices buy more equipment when the real weakens, a partial economic offset to the translation loss on the same subsidiary.
Labels mapped to responses
Forwards and options for transaction rows, monitoring and covenant review for translation, and pricing, sourcing and location decisions for economic exposure.
Where marks go in GF584 Unit 2
A grid with correct labels and no reasoning usually earns less here than one with a debatable label argued well, because the reason column is where a GF584 grader looks first. Treating translation as a cash loss is the error most frequently corrected, and here it tends to surface on the Brazilian net assets. The intercompany loan catches papers that assess exposure only from the parent's chair and conclude there is none. Anticipated sales labeled as transaction exposure before any order exists overstate what a forward could safely cover. Economic exposure described only in general terms, without naming the competitor, market or price channel, reads as a definition rather than an analysis. Skipping the response column misses why the prompt asks for classification in the first place.
Get a GF584 Unit 2 example written to your instructions
Forward the Unit 2 case, any list of positions it gives and the rubric. The custom exercise labels each item, argues the borderline rows in a paragraph apiece and maps every label to the response it implies; turnaround is 24-48h and the first sample is free.
GF584 Unit 2 questions, answered
Can one item fall into more than one category?
Yes, and saying so often earns credit. A foreign subsidiary's local borrowing can be a transaction exposure for the subsidiary and part of the parent's translation exposure at the same time. Pick the label that governs the response the prompt asks about, then note the second in a sentence. What graders resist is a label chosen without any reason at all.
Is an anticipated sale transaction exposure?
Most texts treat it as operating or economic exposure until a contract fixes the amount and currency, at which point it becomes transaction exposure. Some courses use the term anticipated transaction exposure for the middle ground. Follow your text's vocabulary, but make clear that an amount not yet contracted carries volume risk as well as currency risk.
Why does classification matter if all three involve exchange rates?
Because each calls for a different response. Transaction exposure suits financial hedges sized to known amounts. Translation exposure changes reported equity rather than cash, so many firms monitor it instead. Economic exposure plays out over years through prices and competitors and is usually managed through operating decisions. A wrong label leads straight to the wrong tool.