Currency Hedging

Essay specific features

 

Issue:

Business

 

Written by:

Tim W

 

Date added:

March 23, 2013

 

Level:

 

Grade:

B

 

No of pages / words:

4 / 846

 

Was viewed:

2501 times

 

Rating of current essay:

 
Essay content:

Currency hedging, if used correctly, can be beneficial to a company. Currency hedging is the act of entering into a contract, today, with a foreign exchange company to exchange a foreign currency into US currency at a certain exchange rate on a specified date in the future. For instance, a US company enters into a contract with a company in Europe to sell a product; the contract amount is 3...
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For instance, a US company enters into a contract with a company in Europe to sell a product; the contract amount is 3.0 million euros. When the current foreign exchange rate for euros to dollars was equal, the US company would make $3.0 million. To protect its profits, the US company would then negotiate a forward transaction with a foreign exchange bank to convert euros to dollars on the date payment is due from the other company...
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