Writing Homework Help

DeVry University Foreign Currency Options & Hedging Contracts Discussion

 

1. Why might a company prefer a foreign currency option rather than a forward contract in hedging a foreign currency firm commitment? Why might a company prefer a forward contract over an option in hedging a foreign currency asset or liability? How could this create a problem for a U.S. company where you may be employed?

2.What is a derivative? How are derivatives used to hedge foreign exchange risk?