International Finance 2 min read
Transaction Hedging Under Uncertainty
Uncertainty about either the timing or the existence of an exposure does not provide a valid argument against hedging. Uncertainty…
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Safeguarding Financial Stability
The crises of the 1990s have shown the importance for a prudent sovereign debt management, effective capital account liberalization, and…
International Finance 2 min read
Financial Techniques to Manage Transaction Exposure
The main feature of a transaction exposure is the ease of identifying its size. Additionally, it has a well-defined time…
International Finance 2 min read
Difference between Options and Futures
The basic and most prominent difference between options and futures is related with the obligations they create on part of…
International Finance 1 min read
Options on Currency Futures
Instead of having to buy and sell currency pairs, options in a currency future offers the contract-holders the right, but…
International Finance 1 min read
Options on Currency Pairs
The party that purchases a currency pair call option may also decide to settle for an execution or to sell…
International Finance 1 min read
Foreign Currency Futures
Currency futures make the buyer of the contract to buy the long currency (numerator) by paying with the short currency…
International Finance 1 min read
Long and Short Currency Trading
Currency futures and options are derivative contracts. These contracts derive their own values from utilization of the underlying assets, which,…
International Finance 1 min read
Foreign Currency Futures & Options
Depending on the selection of buying or selling the numerator or denominator of a currency pair, the derivative contracts are…
International Finance 2 min read
Managing Economic Exposure
The economic exposure risks can be removed through operational strategies or currency risk mitigation strategies. Operational strategies ● Diversifying production facilities and markets for…
International Finance 1 min read
Determining Economic Exposure
The economic exposure is usually determined by two factors − ● Whether the markets where the company inputs and sells its products…
International Finance 2 min read
Calculating Economic Exposure
Foreign asset or overseas cash flow value fluctuates with the exchange rate changes. We know from statistics that a regression…