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Derivatives and Risk Management, 1st Edition
book

Derivatives and Risk Management, 1st Edition

by Sundaram Janakiramanan
May 2024
Intermediate to advanced content levelIntermediate to advanced
542 pages
27h 26m
English
Pearson India
Content preview from Derivatives and Risk Management, 1st Edition
Forward Contracts 55
4.6.1 The Operation of the Currency Forward Market
Currency forward contracts are usually provided by banks. If an Indian exporter needs to enter into a U.S.
dollar forward sell contract, they will approach a bank authorized to deal in the foreign exchange for the
same. e bank will quote the forward rate, and the contract will be nalized.
Banks take a risk by entering into a forward contract. For the exporter, there is no risk, because they
have an open position in a foreign currency that they are covering with the forward contract. An open
position means that the exporter is exposed to foreign exchange risk. is exposure to foreign exchange
risk arises because the exporter will be receiving U.S. dollars aer 90 days ...
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Publisher Resources

ISBN: 9781299447547Publisher Website