a)Suppose your firm is importing raw materials from abroad to be used in manufacturing. These materials costs are in dollars. Your revenues are in lira. You are exposed to fluctuations in dollar/try exchange rate. What are some risk management tools that you can use to control this risk? What can you buy or sell to mitigate this risk?

b) Suppose you have a stock portfolio investment in Borsa Istanbul Stock Exchange. You are worried that the market is overvalued and there may be a downturn. Is there anything that you could do to hedge your position in stocks, by using derivative instruments?

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I We live in a global economy and many companies source and sell their products all over the world That means their customers and suppliers are often located in different currency zones While commonpl... View the full answer