Ads
related to: define foreign exchange risk
Search results
Results From The WOW.Com Content Network
Foreign exchange risk (also known as FX risk, exchange rate risk or currency risk) is a financial risk that exists when a financial transaction is denominated in a currency other than the domestic currency of the company.
A foreign exchange hedge transfers the foreign exchange risk from the trading or investing company to a business that carries the risk, such as a bank. There is a cost to the company for setting up a hedge. By setting up a hedge, the company also forgoes any profit if the movement in the exchange rate would be favourable to it.
Currency risk: the risk that a financial instrument or business transaction will be affected unfavorably by a change in exchange rates. Foreign exchange risk hedging [15] [16] is used both by investors to deflect the risks they encounter when investing abroad, and by non-financial actors in the global economy for whom multi-currency activities ...
Interest rate risk, the risk that interest rates (e.g. Libor, Euribor, etc.) or their implied volatility will change. Currency risk, the risk that foreign exchange rates (e.g. EUR/USD, EUR/GBP, etc.) or their implied volatility will change. Commodity risk, the risk that commodity prices (e.g. corn, crude oil) or their implied volatility will ...
Exchange rate risk (also known as foreign exchange risk, risk, or currency risk ) is especially high in periods of high currency volatility. This volatility can impact a company's balance sheet and/or cash flow: Corporate currency analytics help companies manage currency risk in both areas. [3]
A foreign exchange option (commonly shortened to just FX option) is a derivative where the owner has the right but not the obligation to exchange money denominated in one currency into another currency at a pre-agreed exchange rate on a specified date.
Retail foreign exchange trading is a small segment of the larger ... and the introduction of foreign exchange risk. The forward exchange rate is based on the spot ...
A foreign exchange derivative is a financial derivative whose payoff depends on the foreign exchange rates of two (or more) currencies. These instruments are commonly used for currency speculation and arbitrage or for hedging foreign exchange risk .