{"product_id":"hedging-with-interest-rate-swaps-and-currency-swaps-von-nicolas-beilke-verena-hauff-sarah-pluhar","title":"Hedging with Interest Rate Swaps and Currency Swaps","description":"\u003cp\u003eSeminar paper from the year 2006 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, grade: 1,0, Reutlingen University (sib - school of international business Reutlingen), course: International Financing, language: English, abstract: Risk management within companies is getting more and more important. The  reasons for this development are varied. The most important factor is doubtless  the internationalisation of companies. Acting on international markets offers on  the one hand numerous chances for an enterprise but on the other hand it also  holds  an  additional  risk  potential  concerning  losses.  This  negative  aspect  is  mainly  caused  by  a  lack  of  information  regarding  political  risk  and  exchange  rate risk. Risk  management  is  also  necessary  referring  to  change  in  interest  rates.  It  is  possible to limit, control and organize the interest rate risk as well as other risks  of the company. As the financial outcome of a company gains importance risk  management concerning interest rates and exchange rates is thus essential. To face these risks and other problems that derive of variations in stock markets,  interest markets or exchange markets derivative instruments play a significant  role. In April 2003 the International Swaps and Derivatives Association (ISDA) published a survey of derivatives usage by the world¿s 500 largest companies.  According to this study 85% of the companies use derivatives to help manage  interest rate risk and 78% of them use derivatives to help manage currency risk.  Only 8% of the 500 largest companies do not use derivatives. There are many different kinds of financial instruments which are very complex  in their function. This  paper  has  its  focus  on  interest  rate  and  currency  swaps.  By  using  these  instruments it is possible to hedge interest rate risks or currency risks. The  first  chapter  gives  an  overview  about  existing derivatives  and  about  the  structure and  function of  swaps.  Moreover  the  different  kinds  of traders  with  emphasis on hedging will be described. \u003c\/p\u003e\u003cp\u003eAfterwards  the  impact  of  interest  risks  on  companies  as  well  as  OTC  instruments  that  are  used  for  hedging  are  explained.  Subsequently  the  definition  of  an  interest  rate  swap  follows  plus  the  application  of  this  instrument with regard to hedging. In chapter five the currency risk management and types of exchange rate risks  are illustrated. After that it will be explained how to hedge these exchange rate  risks.  The  paper  then  gives  a  description  of  currency  swaps  and  their  application. Reasons for swaps in general as well as possible risks will also be  pointed out.  [...]\u003c\/p\u003e\u003cdiv class=\"aw-variant-hidden-subtitle-div\" id=\"aw-variant-subtitle-9783656448433\"\u003e\u003ch3\u003e\u003c\/h3\u003e\u003c\/div\u003e","brand":"Libri","offers":[{"title":"Softcover - 9783656448433","offer_id":39432473083997,"sku":"9783656448433","price":42.95,"currency_code":"EUR","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0940\/0622\/files\/12e89a5d-ff7f-454d-bc41-93e3e65cae99.jpg?v=1778049445","url":"https:\/\/shop.autorenwelt.de\/products\/hedging-with-interest-rate-swaps-and-currency-swaps-von-nicolas-beilke-verena-hauff-sarah-pluhar","provider":"Autorenwelt Shop","version":"1.0","type":"link"}