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“A COMPARATIVE STUDY ON HEDGING STRATEGIES AGAINST FOREIGN EXCHANGE RISK BY USING CURRENCY OPTIONS WITH SPECIAL REFERENCE TO INDIA”:

“A COMPARATIVE STUDY ON HEDGING STRATEGIES AGAINST FOREIGN EXCHANGE RISK BY USING CURRENCY OPTIONS WITH SPECIAL REFERENCE TO INDIA”

Slide 2:

Introduction In today’s the risk can broadly be classified into two groups that are business risk and financial risk. The Business risks are allied with the operating environment such as technological changes, marketing, etc where as the Financial risks are allied with foreign exchange rates, interest rates, and commodity prices. The significance of foreign exchange management is broadly explained under the following heads in the thesis as: Value of the firm Reduction in Taxes Expected Cost of Financial Distress Investment Decisions Financing Decision

Slide 3:

This thesis discusses the hedging strategies that a firm should employ for managing foreign exchange risk using Currency Options and it also explains the scenarios and their respective hedging strategies. The scenarios are: Bullish Conditions Bearish Conditions Volatile Conditions

Slide 4:

Need and Importance of the Research Risk is the main factor of investment which is reduced by the hedging strategies involved in Foreign Exchange Market. It lays emphasis on the mechanism of Currency Option segment of Foreign Exchange Market. It gives a clear idea about the strategies that are adopted and applied for better returns on investments .

Slide 5:

Objectives of the Research To understand the Currency Options for Foreign Exchange market in India. To know how the Currency Option hedges the risk or position. To analyze the hedging strategies against foreign exchange risk using Currency Options. To bring out the comparative analysis of hedging strategies adopted against foreign exchange risk using Currency Options in India and other counties.

Slide 6:

Scope of the Research The Research is consistent in the frame work of Hedging Strategies developed for decision making of investors in Currency Options Market. The Research is helpful to the users and investors who apply the true Hedging Strategies for higher returns which is less likely to be gained through normal spot market operations.

Slide 7:

Research Methodology Study and observation Sources of data: Primary: Formal and informal Discussion with Company guide. Secondary: The secondary information is mostly taken from websites, books, newspapers and journals etc. Tools & Techniques of Analysis The data will be analyzed by using Break Even Analysis and Hedging Strategies. Tables, graphs and diagrams will be presented, wherever necessary.

Slide 8:

Hypotheses of Study: H0 (Null Hypotheses) = The Currency Option acts as a risk minimizing tool and attracts the investors in Foreign Exchange market. H1 (Alternative Hypotheses) = The Currency Option neither acts as a risk minimizing tool nor attracts the investors in Foreign Exchange market.

Slide 9:

Conclusion Finding out the right hedging strategies to overcome the foreign exchange risk in order to attract more foreign exchange to India. The comparative analysis of various countries will help in identifying the hedging strategies for avoiding foreign exchange risks.

Slide 10:

BIBLIOGRAPHY Books: 1. P.G.Apte, International Financial Management, Tata McGraw-Hill, New Delhi, 2004. 2. Introduction to Futures and Options Markets (3rd Edition) by John Hull. 3. Derivatives: A The Tools That Changed Finance by Phelim P. Boyle 4. Options dealers Module work book – NCFM Websites: www.derivativesindia .com www.investopedia.com www.nseindia.com www.bseindia.com www.the-finapolis.com www.karvy.coms www.moneycontrol.com

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