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 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.

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.  

scholarly journals . Experimental synthetic approach to segment assessment of aggregate credit risk

2019 ◽  
Vol 48 (1) ◽  
pp. 184-189
Author(s):  
Светлана Черниченко ◽  
Svetlana Chernichenko ◽  
Роман Котов ◽  
Roman Kotov ◽  
Светлана Гильмулина ◽  
...  
Keyword(s):  
Exchange Rate ◽  
Interest Rate ◽  
Credit Risk ◽  
Foreign Exchange ◽  
Foreign Currency ◽  
Interest Rate Risk ◽  
Risk Level ◽  
Inflation Expectations ◽  
Synthetic Approach ◽  
Rate Risk

Multifaceted, multifactor and multicomponent nature of credit risk makes it possible to consider it as an integral hypothetical unit which consists of the autonomous diverse segments specifying risky situations. As the given article is focused on the mechanism of loan fund circulation within foreign currency loan the author considers the combination of credit, interest rate, foreign exchange and inflation risks within the aggregate (total, combined) credit risk. Foreign exchange and inflation risks generate special interest in relation to evaluation procedures as there can be statutory regulation of interest rate risk and well-functioning mechanism of debt capacity analysis as the main factor of credit risk. As commercial loans and bank credits taken by Russian companies are wide spread the authors of the article suggest an innovative procedure of aggregate credit risk assessment considering agricultural companies, as well as companies belonging to chemical and machine-building industries as “pure borrowers” (debtors). The research has a set sequence of procedures. During the first stage the authors structured a risky situation in the lending process, determined specific constituents and performed their further strategic agreement. The second stage implies the analysis of the possibilities and specific characteristics of the preliminary segment assessment of the risk level. The third stage involves the development of experimental synthetic approach to the segment assessment of the aggregate credit risk in case of foreign exchange rate and interest rate volatility when there are inflation expectations. The procedure considers the following scenarios: 1) isolated assessment of inflation risk; 2) isolated assessment of exchange rate risk; 3) complex assessment of inflation and exchange rate risks.

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.

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