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Title: |
Foreign Production and Optimal Hedging of
Risky Revenues |
| Author: |
Broll, Udo |
| Author
Affiliation: |
U Osnabruck |
| Source: |
International Economic Journal, Spring 1995, v. 9, no. 1, pp. 13-18 |
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Publication Date: |
Spring 1995 |
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Abstract: |
In this paper we analyze the implications
of risky revenues for foreign production and hedging decisions of an
international firm. In a two-period framework under exchange rate
uncertainty and other sources of uncertainty as well it is shown that
risk related elements affect not only the level of hedging but also the
amount of foreign production. Currency forwards do not guarantee the
separation theorem of risk sharing market. |
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