【精品】multinational financial management（跨国公司财务）ch08 options contracts and currency futures（可编辑）.ppt

Multinational Financial Management（跨国公司财务管理）ch08 Options Contracts and Currency FuturesPART IFutures ContractsFUTURES CONTRACTSI.CURRENCY FUTURESA.Market History:1.Backgrounda.Long historyb.Extremely volatile due to theirinformation driven naturec.The market plays a Price Discovery Role for other financial markets such as the cash marketsFUTURES CONTRACTSB.International Monetary Market(IMM)1972:opened by the Chicago Mercantile Exchange Purpose:to provide a stable market for the exchange of currency futures.FUTURES CONTRACTS2.IMM providesa.an outlet for hedging currencyrisk with futures contracts.Definition of a Futures Contract:contracts written requiring a standard quantity of an available currency at a fixed exchange rate at a set delivery date.FUTURES CONTRACTS:SAFEGUARDSe.Maximum price movement rules:Contracts set daily to a pricelimit that restricts maximum daily upward and downward movements.FUTURES CONTRACTS:SAFEGUARDSf.Maintenance Margins:When the account balance falls below the maintenance margin,a margin call may be necessary to maintain the minimum balance.FUTURES CONTRACTSg.Global futures exchanges:1.)I.M.M.International Monetary Market2.)L.I.F.F.E.London International Financial Futures Exchange3.)C.B.O.T.Chicago Board of Trade4.)S.I.M.E.X.Singapore InternationalMonetary Exchange5.)D.T.B.Deutsche Termin Bourse6.)H.K.F.E.Hong Kong Futures ExchangeFUTURES CONTRACTSB.Forward vs.Futures ContractsBasic differences:1.Trading Locations6.Quotes2.Regulation7.Margins3.Frequency of 8.Credit risk delivery 4.Size of contract 5.Transaction CostsFUTURES CONTRACTSAdvantages of futures:1.)Easy liquidation2.)Well-organized and stable market.Disadvantages of futures:1.)Limited to 7currencies2.)Limited dates of delivery3.)Rigid contractsizes.PART IICurrency OptionsCURRENCY OPTIONSI.OPTIONSA.Currency options 1.offer another method to hedge exchange rate risk.2.first offered on PhiladelphiaExchange(PHLX).3.HOW CURRENCY OPTIONS ARE PURCHASEDBuyers Sellers=WritersBuySellBuySellCALLPUTPremiumCURRENCY OPTIONS4.Definition:a contract from a writer(the seller)that gives the right not the obligation to the holder(the buyer)to buy or sell a standard amount of an available currency at a fixed exchange rate for a fixed time period.CURRENCY OPTIONS5.Expiration Dates of Currency Options:a.Americanexercise date may occur anytime up to the expiration date.b.Europeanexercise date occurs only at theexpiration date and not before.6.What is the premium?the price of an option that the writer charges the buyer.CURRENCY OPTIONS7.Exercise Pricea.Sometimes known as thestrike price.b.The exchange rate at which the option holder can buy or sell the contracted currency.CURRENCY OPTIONSc.Types of Currency Options:1.)Calls give the owner the right to buy the currency2.)Puts give the owner the right to sell the currencyCURRENCY OPTIONS8.Status of an optiona.In-the-moneyCall:Spot strikePut:Spot strikeb.Out-of-the-moneyCall:Spot strikec.At-the-moneySpot=the strikeCURRENCY OPTIONS9.Why Use Currency Options?1.For the firm hedging foreignexchange risk when a future event is very uncertain.2.For speculatorswho profit from favorable exchange rate changes.