Question: Hedging. What is a hedge? How does that differ from speculation? Foreign Currency Option Premia. Why do many firms object to paying for foreign currency

Hedging.What is a hedge? How does that differ from speculation?

Foreign Currency Option Premia.Why do many firms object to paying for foreign currency option hedges? Do firms pay for forward contract hedges? How do forwards and options differ if at all?

Hedge Ratio.What is the hedge ratio? Why would the hedge ratio ever be less than one?

Hedging Objectives.All multinational companies will state the goals and objectives of their currency risk management activities in their annual reports. Beginning with the following firms, collect samples of corporate "why hedge?" discussions for a contrast and comparison discussion.

Nestl

www.nestle.com

Disney

www.disney.com

Nokia

www.nokia.com

www.bp.com

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