--%>

Contingent exposure and its benefits

Describe the contingent exposure and also discuss some of the benefits of using currency options in order to maintain this type of currency exposure.

E

Expert

Verified

Companies can encounter the situation in which they may or may not face the currency exposure. In such situation, a company requires options, and not obligations, in order to buy or sell the given amount of foreign exchange they may or may not receive or have to pay. In case, companies either hedge by using the forward contracts or do not hedge at all, they may face the specific currency exposure.

   Related Questions in Financial Accounting

  • Q : Type of bond instrument You are an

    You are an investment banker who is advising a Euro bank about the new international bond offer it is considering.  Proceeds are to be used to fund Eurodollar loans to the bank clients.  Specify the type of bond instrument you would recommend that bank shoul

  • Q : Call Option-Out of the money Explain

    Explain the terminology that an option is in-, at-, or out-of-the-money?

  • Q : Lessons from experiences of Novo State

    State some of the factors which motivated Novo Industries to seek the U.S. listing of its stock. Explain about the lessons which may be derived from experiences of Novo?

  • Q : Explain Return on Assets or ROA Return

    Return on Assets (ROA): It is an indicator of how gainful a company is associative to its net assets. ROA provides an idea as to how proficient management is at employing its assets to produce earnings. Computed by dividing a company's annual earnings

  • Q : Essay topics related to Religion I have

    I have some problem related to Essay topics which are related to Religion which are illustrated below: Topic A:What are the qualities of the ‘perfect&rsq

  • Q : Characteristics of Zero coupon bonds

    State the characteristics of the Zero coupon bonds market instrument.

  • Q : Advantages for giving Cash Discount

    What are various advantages for giving Cash Discount?

  • Q : Recommended action for GM to manage its

    General Motors exports the cars to Spain however the strong dollar against the peseta, hurts the sales of GM cars in the Spain. In Spanish market, GM faces the competition from the French and Italian car makers, like Renault and Fiat, whose currencies stays stable wit

  • Q : Concessionary loan with APV model State

    State nature of the concessionary loan and explain how it is handled within the APV model?

  • Q : Describe Long Holding Period Describe

    Describe Long Holding Period briefly with suitable example?