O'Reilly logo

International Corporate Finance: Value Creation with Currency Derivatives in Global Capital Markets, + Website by Laurent Jacque

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

PART Four

Managing Foreign Exchange Risk

The exchange rate variable permeates all key financial management decisions and injects a considerable degree of variability into a firm's overall risk profile. Part Four starts by asking whether hedging a part or the totality of a firm's exposure to currency risk is indeed value-creating for the firm's owners and therefore warranted (Chapter 14). To the extent that exchange rate forecasting (Chapter 15) is indeed a treacherous activity in the context of clean floating exchange rates, we take a “total risk” view of risk management. Exporters/importers as well as multinational corporations and globally reaching financial institutions generally hedge their exposures to both transaction and translation exposure by using forwards, futures, options, or swaps. Measuring and managing transaction, translation, and economic/operating exposures are discussed in Chapters 16, 17, and 18, respectively.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required