Currency Futures and Options, Transaction Exposure Management

International Finance Problem Set 03 Haiyan Yin
Problem Set 3
Currency Futures and Options; Transaction Exposure Management
Suggested Answers
Part I:Short Essays or Answers
1. Describe the differences in currency forward, futures, and options and their applications in
transaction exposure management.
Answer: See textbook
2. Options versus Futures. Explain the difference between foreign currency options and
futures and when either might be most appropriately used.
is
is a
3. a. Define the term foreign exchange exposure .