Futures contracts may help firms hedge against exchange, Ask an Expert

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Futures contracts may help firms hedge against exchange rate risk by

enabling the hedger to offset foreign currency losses by profiting from the sale of the futures contract.

giving the owner of the contract the right to swap one currency for another at a later date.

giving the holder of the contract the ability to purchase foreign currencies at a predetermined exchange rate at a future date.

providing riskless arbitrage opportunities.

paying the holder of the contract in the event of a loss, much like an insurance policy.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91735735

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