Part III

Understanding Long-Term Concepts and Short-Term Risks


pt_webextra_bw.TIF Learn new ways to hedge against foreign exchange risk in the article "Checking Out Foreign Exchange Swaps" at

In This Part . . .

check You learn the concepts of the Interest Rate Parity and the Purchasing Power Parity. They enable you to tell not only which direction the change in the exchange rate will go, but how much the exchange rate is expected to change.

check You find out why you should not expect the dollar price of a Big Mac in Paris to be the same as in New York City.

check You get to see how foreign exchange derivatives help multinational companies to hedge against foreign exchange risk and help speculators to make a buck.

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