Applied Financial Mathematical Model for Derivative Instruments and Hedging Exchange Rate
Journal Title: International Journal of Academic Research in Accounting, Finance and Management Sciences - Year 2013, Vol 3, Issue 4
Abstract
Currently, the international economic transactions are regularly occurring. The statistics of imports and exports were published by the General Administration of Customs that the total turnover of the country's imports in year of 2012 was 228.37 billion U.S. dollars, increased by 12.1 % in comparison with the results of 2011. Thus, this is the 2nd year in a row total export and import turnover of Vietnam exceeded $ 200 billion. This result shows that the foreign currency transactions of Vietnam economy are growing and exchange rates are regularly fluctuated in the foreign exchange market. The objective of the article is application of derivative instruments to hedge exchange rate fluctuation. From the data of actual economic events, the article uses the financial mathematical formulas to evaluate spot rate, forward rate, put and call options rate and finds out the results of the impact factors of exchange rate risk and the effectiveness of the application of derivative instruments for financial hedging. The research results show that the application of derivative instruments is necessary to minimize financial risk and how to bring high economic benefits?
Authors and Affiliations
Doan Van Dinh, Guangming Gong
Keywords
Related Articles
- EP ID EP104545
- DOI 10.6007/IJARAFMS/v3-i4/405
- Views 102
- Downloads 0
The Implications for Fiscal Policy Considering Rule-of-Thumb Consumers in the New Keynesian Model for Romania
In this paper it was analyzed the effects of fiscal spending shocks on the Romanian economy. The study of the literature has suggested that the standard real business cycle and New Keynesian models have difficulties in p...
Corporate Social Responsibility Accounting and the Effect of Donations on Profitability of Oil and Gas Companies in Nigeria
There is a crying need for an in-depth study into the quality, extent of corporate social responsibility (CSR) disclosure and identification of areas for future improvement so that transparency can be ensured, especially...
The Sustainability Approach of Romanian Agriculture
Transition in Romania has been perceived in an original way by the structures of society, social and political factors, but mainly by the economic one. Romanian society has been deprived of the existence of market econom...
Hedge Transactions on the Stock Exchange
Hedge operations are particular stock market operations through which stock market traders, producers, intermediaries intend to cover the unfavorable outcome of the goods price on the cash market (physical). Price hedgin...
Quality Parameters of Human Capital in the Digital Economy
The quality of human capital is one of the main factors influencing the location decisions of economic activity. Flows of capital and technology take place primarily through the activities of transnational corporations (...