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Risk Management Paper - Risk Management Paper 1 Risk...

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Risk Management Paper Risk Management Paper University of Phoenix FIN 415 October 2, 2008 Introduction 1
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Risk Management Paper The business world today is a risky place. This can be especially true when doing business outside of the firm’s home nation. Luckily, businesses today have financial instruments at their disposal to help them to manage the risks involved in doing business both domestically and overseas. These instruments include forward contracts as well as futures contracts that help to minimize the risk of doing business. Without these financial instruments the business world would be a much more uncertain place. Forward Contracts A forward contract is a method by which two parties who wish to do business can minimize the uncertainty involved in a transaction. The forward contract accomplishes this by establishing a price today for a commodity that will be delivered at some agreed upon future date. The Investopedia.com (2008) stated, “A cash market transaction in which delivery of the commodity is deferred until after the contract has been made.
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