Here is the synopsis of our sample research paper on Are the Efforts by Companies to Hedge Currency Risks Any Value to the Company Owners?. Have the paper e-mailed to you 24/7/365.
Essay / Research Paper Abstract
This 8 page paper argues that the use of hedging, when used correctly can be of great value to the owners of a company, reducing risk and reducing potential volatility of returns. However, the tool has to be used correctly for the benefit to outweigh the costs. The paper discusses these hedging issues and considers where and when it should be used. The bibliography cites 5 sources.
Page Count:
8 pages (~225 words per page)
File: TS14_TEvalhedge.rtf
Buy This Term Paper »
Unformatted sample text from the term paper:
value to the owners of such companies. There is little doubt that exchange rate variation will impact on the profitability of a company, increasing potential volatility or returns. It is
also known that these swings in the returns can be off putting as well as impacting on measures such as the beta. Hedging may be a way of reducing
exposure to risk, but it can also be argued as either good or bad for the owners. Like any tool hedging will have a cost attached, it may be
argued that if the cost attached is projected at being lower than the risk, then the hedge is worthwhile. The problem is the lack of knowledge of the future, meaning
we can only guess what they risk is. Just as if it were a risk of loss, there may also be a potential change in favour of the business that
will increase profits. The way in which hedges operate mean that the option is not taken up, but this appears to indicate the cost of the hedge has ten been
lost. To consider this further we need to look at the practical application of hedging. The first stage is to define what it is we mean by hedging. This is
a tool that is made use of by traders or companies that want to protect an open position. An open position is a position where losses may be incurred as
the company or trader has some commodities, which can include currency and securities, which are bought, but not sold, or sales that are not covered or hedged, meaning that fluctuations
could impact on the value of the trade. The latter of these is know generally as a bear position, where it is a trade, and the former, where it is
...