RISK FINANCING 2 2 RISK FINANCING Risk Financing Author's Note: Foreign Exchange Derivatives

RISK FINANCING RISK FINANCING 2 2 RISK FINANCING Risk Financing Author’s Note: Introduction The financial markets are everchanging and therefore to counter the risks which are involved in foreign exchange transactions, foreign exchange derivatives are used by businesses. In a forward contract situation, an agreement is made between two parties for either buying or selling a product at a specific price, however, the actual transaction takes place at a future date and this a main feature of a forward contract (Wong