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Nematrian Reference Library

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Summary "In Chapter VI we introduced currency futures and forwards as currency risk management tools. This chapter introduces another risk management tool: currency option contracts. Options are contracts that help a firm to reduce the uncertainty created by having assets and liabilities denominated in foreign currency. An option contract provides a flexibility that a futures contract does not have. An option contract gives its holders a right, not obligation, as is the case of a futures contract."

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