The large and multinational companies often rely heavily on the international financial markets. Interest rates change continually which makes these markets extremely volatile. It is one of the responsibilities of the Treasurer to manage the interest rate risk of the firm and should able to identify the methods available for hedging interest rate risk. An enterprise should be cautious about [...]
A forward exchange contract is "a commitment to exchange (buy or sell) one foreign currency for another at a specified exchange rate, with the exchange taking place on either a specified future date or during a specified future period". In a forward contract, one party agrees to deliver a specified amount of one currency for another at a specified exchange [...]
Currency options is "a contract giving the buyer the right but not the obligation to exchange a specified amount of one currency into another specified currency on or before a specified date at a specified rate of exchange. The buyer (holder) of the option pays a 'premium' to its writer (seller)". An option is a contract that gives the holder [...]