Decision Rules for Corporate Management of Foreign Exchange Risk
John A. Doukas, Bala Arshanapalli
Abstract
John A. Doukas, Bala Arshanapalli
Abstract
This paper presents specific decision rules for the management of corporate foreign exchange risk. It is shown that a strong association exists between foreign exchange risk and relative price risk. The implication of this association is that corporations should simultaneously use forward currency and commodity futures instruments for optimal management of foreign exchange risk.
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This paper presents specific decision rules for the management of corporate foreign exchange risk. It is shown that a strong association exists between foreign exchange risk and relative price risk. The implication of this association is that corporations should simultaneously use forward currency and commodity futures instruments for optimal management of foreign exchange risk.
Key concepts: Foreign exchange risk, Futures contract, Foreign exchange, Risk management, Business, Currency, Foreign exchange market, Financial economics