Hedging Foreign Exchange Exposure

Essay specific features

 

Issue:

Business

 

Written by:

Nestor S

 

Date added:

January 5, 2012

 

Level:

University

 

Grade:

C

 

No of pages / words:

16 / 4413

 

Was viewed:

1304 times

 

Rating of current essay:

 
Essay content:

The main difference is that futures are a standardized contract traded on an exchange while forwards are negotiated. Short Position: Want to sell. (eg. p96) You are expecting the currency to fall in value. Therefore you chose to sell the currency in the future to make a speculative profit. Short Position (value at maturity) = - contract amount x (spot rate at maturity? futures rate/settle price) Long Position: Want to buy (eg p 96)...
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You are expecting the currency to gain in value. Therefore you chose to buy the currency in the future to make a speculative profit. Long Position (value at maturity) = contract amount x (spot rate at maturity ? futures rate/settle price) Example of a Future: Slide 5-4 Contract Specifications of Futures: Slide 5-6 Futures vs...
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