Derivatives and Risk Management

chapter 11

Currency Derivative Instruments

LEARNING OBJECTIVES

After reading this chapter, you will be able to understand

• the meaning of exchange rates
• exchange rate determination
• the types of currency derivatives
• hedging with currency derivatives
• speculative deals with currency derivatives
• application of currency derivatives

CHAPTER OUTLINE

11.1 Introduction

11.2 Exchange Rate Quotations

11.3 Currency Derivative Products

11.4 Determinants of Foreign Exchange Rate

11.5 Economic Theorems of Exchange Rate Determination

11.6 Speculation with Currency Derivatives

11.7 Hedging with Currency Derivatives

11.8 Hedging Transaction Exposure

11.9 Currency Forwards

11.10 Currency Futures

11.11 Currency Options

11.12 Currency Swaps

THE SITUATION