Risk Sharing Markets and International Trade – A Comment

We consider an exporting firm facing FX risk. We show that FX options are not used for hedging, if there is no ex-post production flexibility. Hence, in the standard setting of having no ex-post optionality, hedging with forwards is the best choice.The value of FX options for hedging arises as soon as there are real options for the exporter like determination of the importing country. It turns out that a risk averse firm will hedge fully by selling a certain portfolio of call options in the absence of speculative motives

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Year of publication:	2014
Authors:	Lehrbass, Frank
Publisher:	[2014]: [S.l.] : SSRN
Subject:	Theorie \| Theory \| Internationale Wirtschaft \| International economy \| Währungsderivat \| Currency derivative \| Multinationales Unternehmen \| Transnational corporation

Extent:	1 Online-Ressource (9 p)
Type of publication:	Book / Working Paper
Language:	English
Notes:	In: "Optimal Hedging with Currency Forwards, Calls, and Calls on Forwards for the Competitive Exporting Firm Facing Exchange Rate Uncertainty", (extended version) Journal of Economics Vol. 59, No. 1, 1994, 51-70 Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments April 15, 1994 erstellt
Classification:	D21 - Firm Behavior ; D92 - Intertemporal Firm Choice and Growth, Investment, or Financing ; F23 - Multinational Firms; International Business ; F31 - Foreign Exchange ; f61 ; G15 - International Financial Markets ; G32 - Financing Policy; Capital and Ownership Structure ; L1 - Market Structure, Firm Strategy, and Market Performance ; M11 - Production Management ; M16 - International Business Administration ; M21 - Business Economics
Source:	ECONIS - Online Catalogue of the ZBW

Persistent link: https://www.econbiz.de/10013060727