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?
Expert
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.
Uncertainty of the exchange rate does not essentially means that the firms face exchange risk exposure. Explain this scenario.
What do you mean by Letter of Credit?
State some of the problems which may enter into capital budgeting analysis in case project debt is computed rather than borrowing capacity made by the project?
Providing reasons, describe the treatment assigned to the following which estimates national income.(i) Family members working freely on farm owned by family.(ii) The Payment of interest on borrowings through general government.
Explain Direct expenses. Also write its main illustrations?
What is the main difference between the periodic and perpetual process, how will you record it in your note-book?
what are the disadvantages of having adequate working capital?
What is the meaning of drawing in financial accounting?
Explain why do investors invest within the lion’s share of their funds within the domestic securities?
It is, normally, not possible to fully remove both the translation exposure and transaction exposure. In some cases, eradication of one exposure will also eliminate the other. However in other cases, removal of one exposure really creates the other.
18,76,764
1937517 Asked
3,689
Active Tutors
1457687
Questions Answered
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!