American option
an option that the holder can exercise at any time up to and including the exercise date<\/p>\n\n\n\n
appreciate
when one unit of a currency will purchase more of a foreign currency than it did previously<\/p>\n\n\n\n
call option
an option that gives the owner the right, but not the obligation, to buy the underlying asset at a specified price on some future date<\/p>\n\n\n\n
depreciate
when one unit of a currency will purchase less of a foreign currency than it did previously<\/p>\n\n\n\n
derivative
a security that derives its value from another asset<\/p>\n\n\n\n
duration
a measure of interest rate risk<\/p>\n\n\n\n
economic risk
the risk that a change in exchange rates will impact the number of customers a business has or its sales<\/p>\n\n\n\n
European option
an option that the holder can exercise only on the expiration date<\/p>\n\n\n\n
exchange rate
the price of one currency in terms of another currency<\/p>\n\n\n\n
exercise price (strike price)
the price the option holder pays for the underlying asset when exercising an option<\/p>\n\n\n\n
exercising
choosing to purchase or sell the asset underlying a held option according to the terms of the option contract<\/p>\n\n\n\n
expiration date
the date an option contract expires<\/p>\n\n\n\n
forward contract
a contractual agreement between two parties to exchange a specified amount of assets on a specified future date<\/p>\n\n\n\n
futures contract
a standardized contract to trade an asset on some future date at a price locked in today<\/p>\n\n\n\n
hedging
taking an action to reduce exposure to a risk<\/p>\n\n\n\n
margin
the collateral that must be posted to guarantee that a trader will honor a futures contract<\/p>\n\n\n\n
marking to market
a procedure by which cash flows are exchanged daily for a futures contract, rather than at the end of the contract<\/p>\n\n\n\n
natural hedge
when a company offsets the risk that something will decrease in value by having a company activity that would increase in value at the same time<\/p>\n\n\n\n
option
an agreement that gives the owner the right, but not the obligation, to purchase or sell an asset at a specified price on some future date<\/p>\n\n\n\n
option writer
seller of a call or put option<\/p>\n\n\n\n
premium
the price a buyer of an option pays for the option contract<\/p>\n\n\n\n
put option
an option that gives the owner the right, but not the obligation, to sell the underlying asset at a specified price on some future date<\/p>\n\n\n\n
speculating
attempting to profit by betting on the uncertain future, knowing that a risk of loss is involved
spot rate<\/p>\n\n\n\n
the current market exchange rate
strike price (exercise price)
the price an option holder pays for the underlying asset when exercising the option<\/p>\n\n\n\n
swap
an agreement between two parties to exchange something, such as their obligations to make specified payment streams<\/p>\n\n\n\n
transaction risk
the risk that a change in exchange rates will impact the value of a business\u2019s expected receipts or expenses<\/p>\n\n\n\n
translation risk
the risk that a change in exchange rates will impact the value of items on a company\u2019s financial statements<\/p>\n\n\n\n
vertical integration
the merger of a company with its supplier<\/p>\n","protected":false},"excerpt":{"rendered":"
American optionan option that the holder can exercise at any time up to and including the exercise date appreciatewhen one unit of a currency will purchase more of a foreign currency than it did previously call optionan option that gives the owner the right, but not the obligation, to buy the underlying asset at a […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1861],"tags":[],"class_list":["post-18222","post","type-post","status-publish","format-standard","hentry","category-risk-management-and-the-financial-manager"],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/4botany.appscodestudio.com\/index.php\/wp-json\/wp\/v2\/posts\/18222","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/4botany.appscodestudio.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/4botany.appscodestudio.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/4botany.appscodestudio.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/4botany.appscodestudio.com\/index.php\/wp-json\/wp\/v2\/comments?post=18222"}],"version-history":[{"count":1,"href":"https:\/\/4botany.appscodestudio.com\/index.php\/wp-json\/wp\/v2\/posts\/18222\/revisions"}],"predecessor-version":[{"id":18223,"href":"https:\/\/4botany.appscodestudio.com\/index.php\/wp-json\/wp\/v2\/posts\/18222\/revisions\/18223"}],"wp:attachment":[{"href":"https:\/\/4botany.appscodestudio.com\/index.php\/wp-json\/wp\/v2\/media?parent=18222"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/4botany.appscodestudio.com\/index.php\/wp-json\/wp\/v2\/categories?post=18222"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/4botany.appscodestudio.com\/index.php\/wp-json\/wp\/v2\/tags?post=18222"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}