Nobody downloaded yet

Finance 2 - Essay Example

Comments (0) Cite this document
For this purpose, companies or investors are often involved in Future Contracts to “hedge” the risk associated with the investment and prices of commodities. It is worthwhile to mention the fact…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER96.6% of users find it useful
Finance 2
Read TextPreview

Extract of sample
"Finance 2"

Download file to see previous pages sales and purchase agreements or decisions in the ‘futures market to develop a known price level’ and mainly ‘to offset the risk exposure and to limit themselves from any price fluctuations’. (
Although the future and forward hedging through future and forward contracts respectively are almost similar in nature yet there is one main difference between the two. Forward Contracts are made for fairly large transactions whereas future contracts are reached for smaller amounts. The large organizations such as multinational or supranational companies, large financial or investor groups may involve themselves in forward contract hedge.
Monet market Hedge is an internal hedging technique which refers to “borrowing and lending transactions to eradicate currency risk by locking the particular variables related to foreign exchange and cash equivalents.” (Kofi Bofah)
Currency Option is another instrument utilized by investors or corporations to hedge against negative fluctuations, volatility or movements in foreign exchange rates. In simple words, I can say that Currency Option is an agreement through which the holder f currency has the ‘right to involve in buying or selling of currency at a specified time period.’
For instance, in our case, Hybat Corporation can hedge against foreign currency risk by purchasing a currency option put or call. If it believes that USD/HUF rate is going to fall from 250 to 200 meaning that it will become more expensive for US Hybat to convert its export revenues from HUF to Dollar and send it to its parent company so Hybat would want to buy a ‘put option’. Similarly, if the rate is going to increase from 181 to 200, then Hybat would want to buy a “call option on USD/HUF so that it could stand to gain from an increase in the exchange rate” (or the USD rise). (
You must independently justify the credit rating for each category given. That is, if you use these catagories, they ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
(“Finance 2 Essay Example | Topics and Well Written Essays - 1000 words”, n.d.)
Finance 2 Essay Example | Topics and Well Written Essays - 1000 words. Retrieved from
(Finance 2 Essay Example | Topics and Well Written Essays - 1000 Words)
Finance 2 Essay Example | Topics and Well Written Essays - 1000 Words.
“Finance 2 Essay Example | Topics and Well Written Essays - 1000 Words”, n.d.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document
Finance Paper 2
...purse is estimated to be 9.3 billion pounds. The total budget of the London Olympic organizing committee who is directly responsible for staging the games is estimated to be 2 billion pounds. This is for covering all operational costs. These operational costs are will be met from revenue coming from sale of broadcast rights and ticket sales. The London committee will not finance any sort of capital expenditure. The international Olympic committee requirements necessitate an undertaking that the government is the ultimate guarantor for funding the Olympic Games. The Olympic delivery authority which has been established for ensuring the physical infrastructure has an overall budget of 8.1 billion pounds....
4 Pages(1000 words)Essay
Finance & Accounting Year 2:
... Company Law There are advantages and disadvantages for Black Books plc of raising loan capital rather than share capital Debt financing gives the directors of Black Books plc the opportunity to keep and reinvest more of the company’s profits instead of paying it out as dividends to shareholders (Reference for Business, n.d.). Shareholders prefer to have an increased or constant dividend per share rather than a reduction in dividend per share. Issuing more shares to raise capital may result in a reduction in the dividend per share and this may cause the price of Black Books plc shares to fall. The interest paid on loan capital is allowable for deduction before taxes and therefore provides a shield for part of the company’s income... . The...
9 Pages(2250 words)Essay
Business finance-2
...? Business Finance Teacher’s [Pick the 11s Portfolio Theory and Its Implication to Investors in the Market Portfolio Theory Portfolio theory is tools investor used before committing themselves into long term or a short term investments in securities and equities. In the current investment world, people have different investment aims. One of the most renowned motives is earning income or returns on the investments value. However, economic research shows that using returns alone in selecting best investments option is not adequate. In order to spread risks, most investors diversify by investing in more than one type of security or portfolio. It should be noted that investors like returns but at the same time dislikes risk...
20 Pages(5000 words)Essay
Finance SLP 2
...1. What is the value of your $10,000 of your country’s currency now? The best and fastest way for a person to determine the current value of any monetary unit in terms of another monetary unit is to locate a currency converter online. is a website that is easy to use which provides currency conversions in real time. The current value of $10,000 in terms of Japanese Yen is 1,068,794.22 JPY. 2. Collect the following information: A) The daily currency values for the last week B) The currency values for the last week of last year C) The daily currency values for the last week two years ago. The currency values of USD to JPY were obtain in 7/12/2008 – 106.7960 7/13/2008 – 106.3260 7/14/2008 –...
2 Pages(500 words)Essay
Corporate finance 2
...approaches as very important for capturing the reverse causality between governance and performance and the potential endogeneity among the mechanisms of governance, as corroborated by all quoted studies. It can be concluded that based mostly on the work of Klapper and Love (2003), the governance determinants which respond to the signaling models are future growth opportunities, composition of firm’s assets, firm size, ownership structure, capital structure, corporate performance and dividend payout, besides the control variables industry and liquidity. References 1. Aharony, J. and Swary, I., 1980. Quarterly dividend and earnings announcements and stockholders returns: an empirical analysis. Journal of Finance 35,...
23 Pages(5750 words)Essay
Finance project 2
.... People are bound to cut down their expenses to improve their savings. On the flip side, the weakening of US Dollar against international currencies such as Euro, Pound, Japanese Yen etc because of USA’s surging trade deficit and various internal factors might not aggravate the exchange rate in Hungary and could therefore result in a much better economic outlook within the country. However, in case of strong US Dollar and reversal of international prices, Hungary’s trade deficit could increase thus resulting in inflation and higher exchange rates. In other words, the HUF would depreciate further in near future. Answer 2: My business of creating a new subsidiary of Hybat Corporation by initiating a...
4 Pages(1000 words)Essay
Finance assignment 2 the amount incurred on the essential goods (Chiuri, 2000). Preparing a budget is completely different from following the budget estimates. Most households who prepare budgets fail to completely adhere to their set budgets. This is because most households engage in impulse expenditures (Weston, n.d.). Moreover, the unpredictable changes in prices of the foods and other conditions have made it difficult to follow the budgets. Moreover, following this budget require finance discipline, which is normally a major problem to the households. Most households are unable to forecast on the expected changes in economic environment or may fail to spread their budgets throughout the budget period. In most cases, households tent...
2 Pages(500 words)Assignment
Health Finance 2
...1. Does the organization that you work for receive revenue after services are delivered or before? Why do you think this is? 2. What grouping of revenue do you believe the organization that you work for uses(service line, revenue source, etc.)? Why do you think they chose this grouping? Is this a good choice or do you think there is a better option? October 06, 2012 Revenue Flows in Chiropractor Practice Chiropractor is a form of alternative medicine where pains in the neuro-musculoskeletal system are treated. Treatment is through manual therapy, massage, ice therapy, exercise for the spine and other soft tissues. It is not recognised as a primary case and hence treatment costs for such patients are not provided by the...
1 Pages(250 words)Assignment
Finance Week 2
...Finance Week 2 After reviewing the material for this week, I can say that I now understand a whole lot more about financial ratios, time value of money, and interest rates. I learned that the financial ratios are extremely important because they tell management how the firm is doing and which are its strong and weak areas. I was surprised to learn that the financial ratios depend on GAAP accounting/book value information because I would have thought that a firm would compare it assets and liabilities based on current market values. I was very confused about the time value of money because of all the cash flows equations that are used. I am pleased that we can use a financial calculator to help us, but if...
2 Pages(500 words)Essay
Managing Finance 2
...Managing Finance Explain with examples how the cost of capital is determined. Cost of capital is the minimum acceptable rate on funds committed into particular investment project (Pratt & Grabowski, 2010). The acceptable rate is also referred to as the required rate of return, which is actually a composition of time and risk on the use of capital for investment (Brigham & Ehrhardt, 2011). The cost of capital may be determined by taking into account its components (Brigham & Ehrhardt, 2011). Some of the components that may help to determine the cost of capital include; 1. Cost of Debt. The cost of debt may be determined using the formula, Kd = I (1-T) ÷ Bo, Whereby Bo=market value/issuing price Kd= Cost of debt... ...
1 Pages(250 words)Assignment
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Let us find you another Essay on topic Finance 2 for FREE!
Contact Us