Beruflich Dokumente
Kultur Dokumente
112
Vruddhi Naik
117
Akanksha Omargekar
118
Kruti Shah
128
Prathamesh Shirolkar
133
Akshatha Suvarna
137
Introduction to derivatives
market
Exchange Traded
(Derivatives that trade on an exchange are standardized contracts)
Long Call
Long Put
Short Call
Short Put
2. Swaps
Currency Swaps
Commodity Swaps
3. Futures/Forward contracts
Commodity Options
The Regulator
GE - Lufthansa
2. Risk Shifting
(Ask Lufthansa to pay in USD. But Lufthansa will also consider forward
rate)
Strategies to Overcome
Transactional Exposure
3. Pricing Decision
(If GE wants to protect $10 mn revenue and forward rate is $0.957/ then
they must quote 10/9.57 = 10.45 mn)
Jan 01
Dec 31
Currenc
y
Amount
Borrow
8.7 mn
Discounted at 15%
Invest
8.7 mn
Repay
10 mn
Receive
9.57 mn
Risks:
if the airlines do not know at what price they are going to buy fuel
for their aircrafts 3 months later
By this they will reduce their transaction cost, and can also
determine the costs of running the flights and thus calculate the
cost of a ticket
Thank
You