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ch08 - Multinational Financial Management Alan Shapiro 9th...

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Multinational Financial Management Alan Shapiro 9 th Edition J.Wiley & Sons Power Points by Joseph F. Greco, Ph.D. California State University, Fullerton
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CHAPTER 8 Currency Futures and Options Markets
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PART I Futures Contracts 3
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FUTURES CONTRACTS I. CURRENCY FUTURES A. Market History: 1. Background a. Long history b. Extremely volatile due to their information driven nature c. The market plays a Price Discovery Role for other financial markets such as the cash markets 4
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FUTURES CONTRACTS d. International Monetary Market (IMM) 1972: opened by the Chicago Mercantile Exchange Purpose: to provide a stable market for the exchange of currency futures. 5
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FUTURES CONTRACTS 2. IMM provides a. an outlet for hedging currency risk with futures contracts. Definition of a Futures Contract: contracts written requiring a standard quantity of an available currency at a fixed exchange rate at a set delivery date. 6
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FUTURES CONTRACTS b. Available Futures Contracts: - in over 20 different currencies - cross-rate contracts 7
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