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Download Currency Exposures and Derivatives: Risk, Hedging, Speculation and Accounting – A Corporate Treasurer's Handbook fb2

by Mr. A V Rajwade

  • ISBN: 0071332790
  • Category: Money & Business
  • Author: Mr. A V Rajwade
  • Subcategory: Finance
  • Other formats: lrf mobi rtf azw
  • Language: English
  • Publisher: Tata McGraw Hill Education Private Limited (February 26, 2010)
  • Pages: 152 pages
  • FB2 size: 1817 kb
  • EPUB size: 1881 kb
  • Rating: 4.2
  • Votes: 820
Download Currency Exposures and Derivatives: Risk, Hedging, Speculation and Accounting – A Corporate Treasurer's Handbook fb2

V. Rajwade is a well-known risk management consultant, author, columnist and trainer. He has authored several books including Handbook of Debt Securities and Interest Rate Derivatives (2007) published by Tata McGraw Hill.

V. He has vast experience and expertise in the financial markets including two decades of working with the SBI in India and abroad and almost three decades of consulting many corporate organizations and banks.

Currency Exposures and Derivatives book. Huge losses incurred in currency derivatives contracts.

A companion volume to his book Cash and Derivatives Markets in Foreign Exchange, this book covers: Types of currency exposures and their effects on the bottom-line of businesses

There are two types of hedge recognized.

There are two types of hedge recognized. For a fair value hedge, the offset is achieved either by marking-to-market an asset or a liability which offsets the P&L movement of the derivative.

Schnabel, Exposure to Foreign Exchange Risk: A Multi-currency Extension, Managerial & Decision Economics, 10, (1989), 331-333. H. White, A onsistent Covariance Matrix and a Direct Test for Heteroscedasticity, Econometrica, 48(4), (1980), 817-838.

Exchange Rate Exposure and Usage of Foreign Currency Derivatives by Indian Nonfinancial Firms. I classify a derivative user as an effective hedger (EH firm) if its risk exposures decreased after the initiation of the derivatives program, and as an ineffective hedger/speculator (IS firm) otherwise.

In particular, users of derivatives have higher gross exposures to financial risks compared to non-users, but lower total risk and market risk, and lower or similar net exposures to foreign exchange rate, interest rate and commodity price risk.

Entities implement different risk management strategies to eliminate or reduce their risk exposures.

Subject: hedging currency risks with derivatives. In the course of writing the thesis, we clarified the notion of risk. Moreover, advantages and disadvantages have been formulated for each hedging instrument, namely forwards, futures, options and swaps. The use of forwards as well as futures allows to avoid losses in case of unfavorable changes in exchange rates, but can not give an opportunity to profit in case of positive changes. Call and put options not only hedge the currency risks, but also provide an opportunity to earn.

Keywords: Derivatives, risk management, hedging, speculation, corporate finance, international finance, corporate . International Corporate Finance eJournal.

Keywords: Derivatives, risk management, hedging, speculation, corporate finance, international finance, corporate governance. Bartram, Söhnke . Corporate Hedging and Speculation with Derivatives (April 6, 2015).

"Huge losses have been incurred by several companies in India and abroad on derivatives used for “hedging” interest rate and currency exposures, in the recent past. This has exposed a major weakness: lack of understanding of derivatives and their usage. There has been an acute lack of clarity even among professionals on understanding what constitutes hedging, and the difference between risk reduction and cost reduction. The issue of hedge effectiveness, especially with the mandatory use of Accounting Standard 30 and disclosure norms from 2011 onwards, becomes critical for company auditors as well. In this context, Currency Exposures and Derivatives: Risk, Hedging, Speculation and Accounting—A Corporate Treasurer’s Handbook, a distillate of the author’s rich experience in advising companies, banks and teaching B school students and executives, comes as a topical and much needed offering for corporate treasurers, chartered accountants, auditors, bankers, and students and faculty of management schools. A companion volume to his book Cash and Derivatives Markets in Foreign Exchange, this book covers: • Types of currency exposures and their effects on the bottom-line of businesses • Exchange rate movements • Risk management issues and policies for corporate treasuries • Use and misuse of derivatives • Provisions of AS 11, AS 16 and AS 30 related to the accounting issues and the rules for establishing hedge effectiveness “The two books are undoubtedly a boon, to the economists who seek to understand the real world, the analysts who want to be objective, the practitioners in financial markets who want to benefit, the students who want to learn, and the policy makers who are willing to learn.” Padma Vibhushan Dr Y Venugopal Reddy Former Governor, RBI (From the Foreword) “To be able to explain complex ideas in simple words, to be of relevance to the policy-makers, professionals and neophytes alike, and to continue to hold the reader’s interest…are extremely rare skills. Mr. Rajwade possesses these skills…All readers will find something useful from the wide range of topics that he has covered with consummate ease.” Partho Datta Former Finance Director, Murugappa Group “…The complex subject of foreign currency risk management and derivatives has been dealt with… lucidly and brilliantly…a must read for all Board members, Audit Committee members and advisors who have to deal with Risk and Volatility.” Shailesh V Haribhakti Chairman, BDO Haribhakti Consulting Pvt. Ltd. “…An excellent reference guide for both the initiated as also the uninitiated...” G Padmanabhan Chief General Manager, Department of Payment and Settlement Systems, RBI (In his personal capacity) “…A timely and authoritative guide to the practical side of risk management—a book every treasury manager in India should read and remember.” Sudhir Joshi Former Head, Treasury, HDFC Bank"

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