Business, Management and Accounting
4 years ago

New market instruments protect firms from future currency risks.

Elsevier eBooks
Forward-Looking Market Instruments
Michael Melvin, Stefan C. Norrbin

Paper Summary

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Firms face risks when they owe money in foreign currencies in the future. To deal with this, they can use different market instruments like forward contracts, futures, and options. These instruments help to reduce or eliminate the currency risk. Swaps markets are also discussed in detail. Overall, these tools provide ways for firms to protect themselves from potential losses due to currency fluctuations.