Hedging for a decrease in the valueaHedging for a Decrease in the Value of Swiss francs of Swiss francs
Not what you're looking for?
You are an arbitrageur in London. Swiss francs are presently selling in London for U.S. $0.67. You anticipate that they will increase in value and be selling for U.S. $0.70 in 30 days. You purchase $1 million worth of francs on the spot market. Is there anything that you can do to hedge your bet? That is, is there some way to ensure that you won't lose all of your money in case the value of the franc plummets?
Purchase this Solution
Solution Summary
The solution describes how the risk of currency going down in value can be hedged.
Solution Preview
Since you are long on the asset (Swiss Franc) , you can go short in the Futures market and sell the asset (Swiss Franc) ...
Purchase this Solution
Free BrainMass Quizzes
Basics of Economics
Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.
Economic Issues and Concepts
This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.
Elementary Microeconomics
This quiz reviews the basic concept of supply and demand analysis.
Economics, Basic Concepts, Demand-Supply-Equilibrium
The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.
Pricing Strategies
Discussion about various pricing techniques of profit-seeking firms.