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Currency hedging: conclusions from a study of the effects of hedging
1999 (English)Independent thesis Advanced level (degree of Master (One Year)), 10 credits / 15 HE creditsStudent thesis
Abstract [en]

The globalization for goods and services has increased rapidly during the last period of years. One reason is technology, another is consolidation. The smaller gets larger and the largest gets even bigger. This challenge offers a great deal of opportunities for the multinational corporations, but there is however a lot of risk involved in this. In order to decrease the risk in multinational operations, companies can be involved in the process of hedging. The major purpose of hedging is to establish a future price today. Some of the tools available to corporations that want to use hedging are futures-contract, forwards-contracts and currency options. This thesis examines the different hedging tools, explores briefly the subject currency forecasting and looks at the effects on net-profit when using the different tools. We are introducing a research company that the empirical study is done on. Our conclusion shows that the different hedging tools are different in several aspects and that they should be used during different circumstances. Also, company specific issues, such as risk-aversion, size and expectations affects the choice of hedging tool. In the end of this thesis a model is introduced. This model gives the hedger guidelines of how to hedge. Overall the futures hedge proved to be most proper when the company was risk-avers. The option strategies were most profitable but require hedgers that are more willing to take on risk.

Place, publisher, year, edition, pages
Keyword [en]
Social Behaviour Law, hedging, företagsekonomi
Keyword [sv]
Samhälls-, beteendevetenskap, juridik
URN: urn:nbn:se:ltu:diva-47343ISRN: LTU-EKON-EX--99/027--SELocal ID: 4e606af1-5a8b-4b6b-b453-9574f8e74e66OAI: diva2:1020664
Subject / course
Student thesis, at least 15 credits
Educational program
Business Administration, master's level
Validerat; 20101217 (root)Available from: 2016-10-04 Created: 2016-10-04Bibliographically approved

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