Currencies and Impact of Hedging

Include a few paragraphs explaining the following:

Include the current spot rate and 1-year chart of spot rates for each currency. For the one year, you can copy online.

A. What key factors likely affect the value of the foreign currency of concern over time?

B. Using Currency Futures and Options

1. How can you use currency futures to hedge the exchange rate risk of your MNC?

2. How can you use currency options to hedge the exchange rate risk of your MNC?

C. Go to www.cmegroup.com. Determine the prevailing futures price of the main foreign currency for your business. Go to www.oanda.com and determine the prevailing spot rate. What is the discount or premium of the futures price?