scholarly journals Financial impact of using EUR call options to hedge accounts receivables

2021 ◽  
Vol 12 (01) ◽  
Author(s):  
Dr. Kenneth B. McEwan ◽  
Keyword(s):  
Supply Chain ◽  
Exchange Rate ◽  
Financial Risk ◽  
Foreign Currency ◽  
Exchange Rate Risk ◽  
Financial Loss ◽  
Call Options ◽  
Currency Exchange ◽  
Rate Risk ◽  
Financing Costs

International business has grown rapidly in recent years as companies seek to take advantage of expanding supply chain opportunities. As companies enter into contracts to take advantage of engineering, production, and cost reduction capabilities of the global supply chain, they may be creating a foreign currency exchange rate risk. The quantitative study examined the 60-day EUR/USD exchange rate fluctuation and the use of currency call options to hedge the risk associated with EUR/USD currency fluctuations. The researcher analyzed 13 years of historical EUR/USD currency data and 10 years of actual EUR call options premiums for this research paper. The researcher concluded that the variability of the EUR/USD over 60-days does pose financial risk to a company. The study also found that using currency call options to hedge this 60-day exchange rate risk resulted in an overall transactional financial loss as compared to no hedging. However, research studies have shown that the use of hedging instruments to smooth financial results may result in lower overall financing costs which could offset the hedging transactional costs. This study did not address the benefits of the use of hedging to smooth financial results or obtain other related financial benefits. The researcher recommends that a firm should recognize the exchange rate risks it may be establishing within 60-day EUR or USD payable contracts and develop an appropriate hedging strategy.

Financial impact of using EUR call options to hedge accounts receivables

2021 ◽  
Vol 09 (02) ◽  
Author(s):  
Kenneth B. McEwan ◽  
Keyword(s):  
Supply Chain ◽  
Exchange Rate ◽  
Financial Risk ◽  
Foreign Currency ◽  
Time Frame ◽  
Exchange Rate Risk ◽  
Financial Loss ◽  
Call Options ◽  
Rate Risk ◽  
Financing Costs

International business has grown rapidly in recent years as companies seek to take advantage of expanding supply chain opportunities. As companies enter into contracts to take advantage of engineering, production, and cost reduction capabilities of the global supply chain, they may be creating a foreign currency exchange rate risk. The purpose of this research was to determine the EUR/USD exchange rate risk within a relatively short time frame such as in 60-day accounts receivable and if using currency options to hedge this risk would be financially beneficial on a transactional basis. The quantitative study examined the 60-day EUR/USD exchange rate fluctuation and the use of currency call options to hedge the risk associated with EUR/USD currency fluctuations. The researcher analyzed 13 years of historical EUR/USD currency data and 10 years of actual EUR call options premiums for this research paper. The researcher concluded that the variability of the EUR/USD over 60-days does pose financial risk to a company. The study also found that using currency call options to hedge this 60-day exchange rate risk resulted in an overall transactional financial loss as compared to no hedging. However, research studies have shown that the use of hedging instruments to smooth financial results may result in lower overall financing costs which could offset the hedging transactional costs. This study did not address the benefits of the use of hedging to smooth financial results or obtain other related financial benefits. The researcher recommends that a firm should recognize the exchange rate risks it may be establishing within 60-day EUR or USD payable contracts and develop an appropriate hedging strategy.

scholarly journals Effect of Exchange Rate Risk in the Market Value of Banks Stocks

2017 ◽  
Vol 1 (3) ◽  
pp. 145-178
Author(s):  
Hisham Talaat Abdel Hakim ◽  
Shakir Mohsin Saber Alwahili
Keyword(s):  
Exchange Rate ◽  
Foreign Currency ◽  
Market Value ◽  
Exchange Rate Risk ◽  
Correlation Relationship ◽  
The Public ◽  
Currency Exchange ◽  
Exchange Rate Fluctuations ◽  
Currency Exchange Rates ◽  
Rate Risk

     The research aims to study the nature of relationship between the risks of fluctuations in currency exchange rates and fluctuation in the market value of banks stocks of the research sample, In order to prove the hypothesis two indicators were chosen,the indices of exchange rate risk and the market value of common stocks were selected , period of (42) months ,extending from January (2014) until June (2017), was chosen, The research reached anumber of conclusion, but the most important is that the existence of correlation relationship and the affect of statistical significane pevails between the risks of exchange rate fluctuations and the market value of banks stock the sample of the study, Finally, the research recommends that the Iraqi banking departments work to diversify their banking services to the public and not only to their revenues derived from the sale of foreign currency only.

The Legal Consequences of Unfair Contract Terms in Consumer Loan Agreements Valorized with Foreign Currency

2021 ◽  
Vol 46 (3-4) ◽  
pp. 346-373
Author(s):  
Bartosz Ziemblicki ◽  
Mateusz Lewandowski
Keyword(s):  
European Union ◽  
Exchange Rate ◽  
Foreign Currency ◽  
Exchange Rate Risk ◽  
The European Union ◽  
Currency Exchange ◽  
Court Of Justice ◽  
Currency Exchange Rate ◽  
Unfair Terms ◽  
Legal Consequences

Abstract In recent years, the Court of Justice of the European Union has issued a number of judgments addressing the issue of consumer protection in connection with the use of unfair terms by banks in loan agreements indexed with a foreign currency exchange rate. Most of them have concerned issues of exchange rate risk and exchange rate differences between the purchase and sale rates of a given currency applied by the bank. This article analyzes the recent ruling by the Court of Justice of the European Union in the Dziubak case, which was initiated by referring questions for a preliminary ruling by a Polish court. The article’s purpose is to assess the position taken by the cjeu in this respect and its significance for consumers in Poland. Particular attention was paid to the considerations with regard to the possibility of replacing unfair provisions with general provisions and assessing the consumer’s awareness of the consequences of declaring a contract invalid. The aim is to examine the issues that were dealt with by the Court of Justice of the European Union in the Dziubak case, including – in particular – the answer to the question of whether the issues discussed by the cjeu had already been considered in its previous jurisprudence and whether it presents new, previously unknown legal consequences of the inclusion of unfair contract terms in loan agreements.

General Guidelines for the Conversion of Damages Calculated in Foreign Currency: Tort Claims

2019 ◽  
Vol 28 (1-2) ◽  
pp. 1-14
Author(s):  
Antonio Avalos
Keyword(s):  
Exchange Rate ◽  
Interest Rate ◽  
Foreign Currency ◽  
Exchange Rate Risk ◽  
Economic Factors ◽  
Risk Allocation ◽  
Rate Risk ◽  
Legal Arguments ◽  
The Law ◽  
Tort Claims

Abstract This paper contributes to the debate about determining the proper procedures for the conversion of damages calculated in foreign currency into U.S. dollars by offering general guidelines applicable to tort claims. The analysis expands beyond the typical discussion of selecting the appropriate conversion date by examining other relevant economic factors such as exchange rate risk allocation, the application of an adequate interest rate for the calculation of pre- and post-judgment interest, and the implications of the currency in which the plaintiff suffers the loss. While aiming at properly and fairly compensating the plaintiff as the essential goal of the law on damages, the general guidelines for damages conversion presented rely more on economic principles than on legal arguments.

scholarly journals ANALISIS PENGGUNAAN FORWARD CONTRACT DAN OPTION PADA PERUSAHAAN EKSPOR UD DAMENA DI DENPASAR

2018 ◽  
Vol 7 (4) ◽  
pp. 2226
Author(s):  
Gita Syeba Lubis ◽  
Henny Rahyuda
Keyword(s):  
Exchange Rate ◽  
Foreign Currency ◽  
Behavioral Observation ◽  
Exchange Rate Risk ◽  
Risk Hedging ◽  
Rate Risk ◽  
Forward Contract ◽  
Processing Product ◽  
Quantitative Descriptive ◽  
Collection Methods

  The export company receives income in foreign currency so it will be affected by the exchange rate risk. The purpose of this research is to know the application of hedging forward contract and option method in UD Damena (Seafood Supply & Processing Product) in 2014-2016. This research is quantitative descriptive. The research object used is the resultt of forward contract and option usage which is seen from the increase of foreign exchange differences from export transaction receivables obtained by UD Damena (Seafood Supply & Processing Product) in year 2014-2016. Data collection methods is non-behavioral observation by collecting data from written sources. Data analysis techniques using descriptive techniques by describing the phases of forward contract and option systematically. The results concluded that forward contract and option minimize the risk of exchange rate by generating greater exchange rate difference and option resulted in a lager exchange rate increase than the forward contract.   Keyword: exchange rate risk, hedging, forward contract, option.  

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