Foreign Exchange Hedging, James Tompkins
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- Опубликовано: 7 июл 2024
- This is the eleventh lecture in the "International Finance" series in which I discuss how corporations and other entities can protect themselves from unexpected exchange rate movements. So far this class has been about obtaining an in-depth understanding as to why and how different currencies move up and down in value. To the extent that unexpected exchange rate movements are a risk, we now look at managing this risk. In particular, in this lecture, we look at managing this risk in the short term. My approach is to use a very simple example, and for the same example explore different alternatives to hedging including the use of forwards, futures, options, money market hedges and others. The goal is not only to understand how each hedge works, but the advantages and disadvantages of each.
i love that he re-affirms basics as he goes along. thank you so much! I'm taking this class right now with the identical materials and it's amazing how much a difference presentation makes!
***** Thanks! I'm so happy it is helpful to you.
Thank you for this lecture. This is just to acknowledge that I did watch and enjoyed it.
Best professor ever!
as an accountant in PRC who hasnt figure out what finance is during the past years until recently saw your lessons. Thanks million for your hard work!!
Niu Amy Great! So glad it is helpful for you.
Excellently done!
Sir you are amazing. I have been struggling for days and nights trying to understand this topic from a book. In just 2 hours I understood the whole concept. Thanks a ton
+Nader Hanna That's great! Thanks for your kind words and I am glad it was helpful!
Sir, u r incredible teacher
looking forward to see ur more videos
on other subjects of finance
like financial institution, security analysis ana investment managent
+vini 399 Thanks.
thank you sir........it is very good for understanding conceptual knowledge
Great lectures! Thank you so much! :)
Gülnabat Baliyeva You are welcome and thanks. :)
Mr. Tompkins is very knowledgeable and concise in his instruction, but does he know he is lecturing to adults right? "Is that a happy face or a sad face" what? Funny thing is I answered that a few times, its a happy face !!!!! nice
Thank you. This was really helpful.
+Lenet Kibugi Great! You are welcome. :)
Chen XiXue(701138)
I have learned a lot about Foreign exchange hedging. Sir gave detailed introduction and use some hedging example, such as using a forward contract, using a futures contract or using an options contract and so on. With some calculations and asked more questions in the each topic. Hedging has value increasing benefits in the real world, yet many large companies choose not to hedge. and it’s good to do the exposure netting. It was very helpful! Thank you so much.
great introduction!
Thanks..:)
Thnx sir,
got it
Xing Mengna（701087）It's useful for us to have a better know about the hedging,such as the goal ,key principle and so on.We've known that hedging applies just to the short term, as well as the definition of the transaction exposure.In a word, hedging can't be applied anytime you would like to use, for the sake of fact that it holds both advantages and disadvantages.
Sir, it has great learning experience till now and I am really thankful to you for the same.
Also, can you make an another, an individual video in which give you can explain on transitions in the exchange rate system from the initial period.
Regards.
Thanks. If by transitions from the initial period you mean the % change exchange rate calculation, I do have that. Please see the International Finance playlist. Hope this helps.
Li Ying（701088）I'm quite grateful to master the definition of the hedging and its goal that it is applied in order to offset foreign exchange risk. Furthermore, I know how the hedging in theory create the value by means of those examples. Last but not least, I learned both the advantages and disadvantages of the hedging, otherwise, it should be applied in different ways based on wether in long run or short run.
Nice job James, very insightful. Would it be fair to say that only period to period risk can be hedged away with these methods? If I hedge out 90 days surely I can remove the 3 month risk of fx volatility. But then the next 3 months derivatives will be a function of the then current spot. So over time in an depreciating Euro environment, my business can still suffer if I have sustained and significant long euro positions regardless of hedging. What are companies doing to hedge the long run? thanks!
Great question.....I don't like to answer individual questions on You Tube since it robs others of the thought process but I am happy to point you in the right direction....please watch Economic Exposure, the next lecture in the International Finance Lecture playlist on the Understanding Finance channel ruclips.net/p/PLKmyivlcwsOL1FBQTXjKYyVCwuvV2A1-i and it talks about the long term management of exchange rate (and other types of international) risk. Good luck.
YES !!! :)
like it so much so helpful for my final
Loh Simon Great!
Sir, I will let you know where I have doubts.
Regards.
luv the way of ur teaching
good job sir
I will appreciate if u provide me the link of articles related to
international finance series
+vini 399 Thank you. I actually use current events when I teach this to my students. For example this morning there was a front page article in the Wall Street Journal on how the U.S. fed did not raise interest rates because they are worried that inflation is too low. This morning in class we discussed expected inflation as part of the class and so the article was directly relevant. So in short, the articles I use change every time I teach this class. I would encourage you to relate "real world" and current articles from whatever you read to the content in this lecture series. Good luck.
Did you get it, you did, right? :) just kidding. loved this video Mr. Tompkins..
(240708)
A very good lecture..let me know more about foreign exchange hedging..thank you..
CUIYOUWEN(701139) According to this video,I`ve learned some new concept. First, I know the goal of hedging is to eliminate risk in short term. And is the risk about unexpected affairs. The one key principle behind hedging is to simply take an equal and opposite on your transaction. Second, I check "transaction exposure" on google, found that transaction exposure is the risk, faced by companies involved in international trade, that currency exchange rates will change after the companies have already entered into financial obligations. Such exposure to fluctuating exchange rates can lead to major losses for firms. Based on the video, I`ve learned that we can`t be subject to transaction exposure when there is not a credit transaction. Third, I`ve learned 8 example of hedging, and have deep understanding of this concept.
Be a great drinking game doing a shot every time right is said, right?
Here's 5 dollars give me my broccoli