International Business

Part A

Using well-articulated examples show how forwards and options can be used to manage currency risk. (10 marks)

Forward contract is a contractual agreement between two parties for the sale and purchase of an asset at a predetermined future. So that day and signed delivery is different. Forward khác contract with option contract. Forward contract to perform the obligations of the contract based on legally binding

Forward contract manage risk, or the volatility of an asset or certain commodities such as real estate prices or oil contracts

For examples: Mr.A wants to buy a house Mr.B within 1 year. Mr.B Mr.A will sell for $ 20,000. This is the forward contract. Mr.A is because home buyers and desirable real estate market prices will rise even Mr.B hoping property prices will fall. If house prices last year rose to $ 25,000, the remaining $ 5,000 interest Mr.B Mr.A will lose $ 5,000. Here is an example of a forward contract. For examples: Mr.A wants to buy a house Mr.B within 1 year. Mr.B Mr.A will sell for $ 20,000. This is the forward contract. Mr.A is because home buyers and desirable real estate market prices will rise even Mr.B hoping property prices will fall. If house prices last year rose to $ 25,000, the remaining $ 5,000 interest Mr.B Mr.A will lose $ 5,000. Here is an example of a forward contract. If after a year the price dropped to $ 15,000, then Mr.B can sell and send to the bank with $ 5,000% of bank interest rates at that time and can manage risk. If Mr.A bought homes they will pay out $ 15,000 and paid $ 5,000 of interest on bank interest rates%. On the issue of signing the forward contract, Mr.A would buy with $ 20,000 for 1 year as originally agreed

Forward discount or premium for the VND whose 90- day forward rate is USD0.07 and spot is USD0.072

annualized p=(F-S/S) x(360/90)= -11,1%

An option contract is a contract as a promise that it may or may not happen. An option contract is that there are 2 types of call option and put option...