Compare the financial products available on international markets . Devise and apply appropriate strategies using derivatives to manage currency risk.

Hedging techniques | Business & Finance homework help

The financial products available on international markets vary significantly depending on the market and the type of product. On one hand, there are traditional investment vehicles such as stocks, bonds, mutual funds and ETFs which offer exposure to asset classes from around the globe. On the other hand, there are derivatives such as futures and options which can be used to create highly customized strategies tailored for individual investor needs.

To manage currency risk in an international portfolio, derivatives can provide both hedging & speculative opportunities. Hedging strategies using forward contracts or options help protect against exchange rate fluctuations while retaining upside potential. Similarly , spot/futures contracts – commonly referred to as currency swaps – allow investors to benefit from price changes without necessarily having to own any underlying physical assets (e . g foreign currencies ) . For those looking more aggressive returns , leverage-based instruments like Forex trading give access to leveraged positions with large potential profits & losses — though caution should be exercised due their high risk nature

Ultimately , it is important for investors understand how each derivative works under different market conditions so they may take appropriate action when necessary . Additionally , professional advice may also be sought if needed in order ensure successful implementation & achievement of desired outcomes.