There are four different commonly used financial hedging techniques (Forwards, Futures, Options and Swaps) and some operational hedging techniques that firms use to manage currency risk.
The hedging techniques include swaps, futures, forwards, options and money market hedge. Please be more specific when evaluate each types of hedging techniques, for example swap which include single currency interest rate swap and cross-
currency interest rate swap.
1) Introduction
2) Drawing on literature, critically evaluate all relevant hedging techniques used by large firms or multinational companies. Illustrate your arguments with appropriate examples / cases / empirical studies review.
3) Drawing on literature, critically evaluate all relevant hedging techniques used by small firms. Illustrate your arguments with appropriate examples / cases / empirical studies review.
4) Compare the similarities and differences of the use of these hedging techniques by large and small firms.
5)conclusion
The following learning outcomes are being assessed:
1. Compare the financial products available on international markets
2. Devise and apply appropriate strategies using derivatives to manage currency risk.
3. Critically evaluate the use of derivative instruments to manage currency risk.
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