--%>
Assignment Help - homework help

Currency options and forward contract as hedging tool

State some of the advantages of currency options contract as a hedging tool as compared with the forward contract?

E

Expert

Verified

Main advantage of using the options contracts for hedging is that the hedger may decide whether to exercise the options upon observing the realized future exchange rate. Options thus provide a hedge against the ex post regret that forward hedger could have to suffer. Hedgers may eliminate the downside risk while retaining the upside potential.

   Related Questions in Financial Accounting

  • Q : Creativity and the Individual What are

    What are the various aspects of Creativity on an individual in the creative industry ?    

    		•
  • Q : Report on Business memo analyzing

    Write a Report on Business memo analyzing monthly sales of a company. Try to explain it with graphs.

    		•
  • Q : Trends in international business

    Explain three important trends which have prevailed in the international business during last two decades.

    		•
  • Q : Cash system and mercantile system what

    what is the difference between cash system of accounting and mercantile system of accounting

    		•
  • Q : Define Asset Purchase Asset Purchase :

    Asset Purchase: Agreement between seller and buyer to obtain an organization's assets. In an asset purchase, only particular assets transfer ownership from seller to the buyer. Assets should be re-titled to the latest owner who has the capability to d

    		•
  • Q : Calculate the PV You expect the price

    You expect the price of the stock 3 years from now to be $119.04 (i.e., you expect P ˆ   3  ?? = $119.04). Discounted at a 10% rate, what is the present value of this expected future stock price? In other words, calculate the PV of $119.04.&nb

    		•
  • Q : Fundamenetal Issues on Management

    1.  Somerset Ltd manufactures components for the motor industry. In one of its workshops it has three workers, Joe, Jack and Jonny, who at any one time work on batches of the same component. The standard time allowed to produce one unit is one hour. The workers rate of pay is

    		•
  • Q : Types of international banking offices

    List different types of the international banking offices.

    		•
  • Q : Conglomerate expansion Evaluate the

    Evaluate the given statement: “Firm may decrease its currency exposure by diversifying across the different business lines”.

    		•
  • Q : Pricing spill-over effect Discuss

    Discuss pricing spill-over effect.

    		•