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Title:Exposures and exposure hedging in exchange rate risk management PDF Logo
Authors:Schäfer, Klaus
Pohn-Weidinger, Johannes
Issue Date:2005
Series/Report no.:Freiberg working papers 2005,19
Abstract:Corporations are affected by increasing volatilities on foreign exchange markets. A response to this development was the creation of financial instruments, so called derivatives, in order to protect corporations from the effects of flexible exchange rates. To understand the included risks and to take correct decisions it is necessary to get a fundamental insight into exchange rate risk management. First it is the aim of this paper to systemize the possibilities of determining exchange rate risk as well as objectives of exchange rate risk management. In the second part of the paper a model to determine the optimal hedge ratio in the case of hedging transaction risks with forwards is described.
Subjects:Currency Risk
Transaction Risk
Currency Forwards
Optimal Hedging
JEL:F31
G15
G39
Document Type:Working Paper
Appears in Collections:Freiberger Arbeitspapiere, Fakultät für Wirtschaftswissenschaften, Technische Universität Bergakademie Freiberg

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