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Forward contracts and option contracts

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Reference no: EM131947781

Hedging

There are some risks involved with international transactions due to fluctuations of the foreign currency exchange rates. One way to mitigate those risks is through hedging.

  • Discuss the hedging options: forward contracts and option contracts.
  • What are the advantages and disadvantages of each alternative?
  • What are the costs of each alternative? When is one alternative preferred over the other alternative?

Reference no: EM131947781

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