标题: R41 Managing the risk of foreign currency [打印本页] 作者: cjs238 时间: 2011-7-13 17:16 标题: R41 Managing the risk of foreign currency
Hi,
CFAI Book4 P.377 Example 8
Royal Teck(UK company) is obligated to pay $1.5 million to retirees.
To hedge the currency risk, Royal Teck would need to go long a forward contract on the dollar.
Sorry for my basic question..
Is it possible to answer like this "Royal Teck would need to go SHORT a forward contract on the POUNDS" ?
Thanks in advance!作者: mp3bu 时间: 2011-7-13 17:16
Both are synonymous , but since the currency at home is UK Pounds , hedging using a pound based contract ( i.e. a forward contract on the dollar) sounds more intuitive for what they're trying to do作者: Unforseen 时间: 2011-7-13 17:16
Many thanks, janakisri !作者: infinitybenzo 时间: 2011-7-13 17:16
Can I say "Long a currency forward" instead of " Long a forward contract on the foreign currency"?作者: canadiananalyst 时间: 2011-7-13 17:16
deriv108 Wrote:
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> Can I say "Long a currency forward" instead of "
> Long a forward contract on the foreign currency"?
You can say what you like. It is the other party which needs to understand 作者: liangfeng 时间: 2011-7-13 17:16
Got it.