Let us take a practical example. A US company exports goods to Europe. It generates revenue in Euro which will be converted to USD. So it is exposed to foreign exchange risk. If company does not hedge foreign exchange risk, it may have very fluctuating Profit & loss statement. High deviations...
I am still confused. Let us say at t=0 value of the floating rate bond to be calculated to arrive at the swap value.Floating rate bonds has three 6 months coupon period 6,12 &18 months.
As per above mentioned discussion value of the floating bond t=0, t=6, t=12,t=18 months is 100. Am i correct...
Hi David
Thanks a lot for replying very quickly. It means if someone gets 4th quartile in any of the 4 topics, one can still manage to pass provided one do exceedingly well in remaining three. Thanks a lot again. You are really helpful.
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