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Risk Management (Money Market Hedging (Step 2 (If ASSET then must BORROW…
Risk Management
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Internal Hedging
Matching
If foreign currency ASSETS = foreign currency LIABILITIES, then gains and losses due to currency fluctuations will cancel
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Leading and lagging
For foreign denominated purchase invoices (liabilities) then payments can be brought forward or delayed, depending on exchange rate expectations
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Internal Risk Management is limited, there will always be a degree of unhedged exposure after internal methods have been used