Learn How to Test FX Transaction Hedges Do you test the economic and accounting implications of your FX hedge strategies prior to trading? Testing by definition involves checking the performance of something before putting an idea into practice. This is a prudent and practical step to take when managing foreign exchange risk across the enterprise. When it comes to hedging specific foreign exchange transactions, companies can benefit greatly from testing the most common derivative strategies such as forwards, options, and collars, stress testing the economic scenarios, and comparing the accounting treatment available. By employing this approach, companies can more reliability predict both the cash flow and financial reporting implications of a hedged FX transaction. FX Initiative’s FX Transaction Simulator allows companies to input their ”assumptions" such as exchange rates, interest rates, and market volatility, as well as company specific variables such at the transaction dates, the amount of the transaction, and the desired hedging strategy. Correspondingly, these assumptions are reflected in our proprietary risk analysis model which visually charts the payoff profile of the selected hedge strategy, ranks the economic performance of the alternative spot, forward, vanilla option, and collar strategies side by side, and displays the accounting debits and credits for default and elective accounting treatment. The following 2 minute overview video shows the 3 steps involved in using the FX Transaction Simulator: Want full access? Click to subscribe today! If you are interested in testing your FX transaction hedges prior to trading using the FX Transaction Simulator, sign up for our Foreign Exchange Risk Management Training today and access our complete suite of foreign exchange (FX) continuing professional education (CPE), examples and events at FXCPE.com. Managing FX risk has become a higher priority for many firms for 2017 and it is now easier than ever to learn the fundamentals of currency risk management. Make this the year to reduce FX risk and reap rewards abroad by taking the FX Initiative for your international business today! Click here to start your FX Risk Management Training today! Cheers to your global organization's continued success in the new year, The FX Initiative Team support@fxinitiative.com March 20, 2017By FX Initiative FX Transaction Simulator, Hedging FX Transactions Asset, Continuing Professional Education, Currency, Equity, Expense, Foreign Exchange, Hedge, Liablity, Management, Payable, Receivable, Revenue, Risk, CPE, FX 0 0 Comment
Done Your Derivative Due Diligence? Foreign exchange risk management involves mitigating currency risk to an acceptable level by understanding when and how to hedge using financial instruments or derivatives. In order to effectively use currency derivatives to achieve foreign exchange risk management objectives, firms must recognize their differences and similarities and how they work in practice. While there are a large number of currency derivatives available in the marketplace, very few of these instruments are employed in routine foreign exchange risk management. The most common currency derivatives include forward contracts, vanilla options, and option combinations. By selecting a derivative from a hedge objective perspective, the confusion often experienced from the endless products available in the market can be avoided. The following introduction video to the "FX Spot & Derivatives" course addresses the three main learning objectives that are covered throughout this highly informative hour long educational program, which include (1) to explore the concept of forward contracts and recognize their forward point premium or discount and symmetrical payoff profile, (2) to explore the concept of option contracts and recognize their pricing variables and asymmetrical payoff profile, and (3) to explore the concept of option combinations and recognize how structures such as a zero cost collar create a unique payoff profile. Want full access? Click to subscribe today! If you are interested in learning more about foreign exchange spot & derivatives and how they are used in routine foreign exchange risk management, sign up for our Foreign Exchange Risk Management Training today and access our complete suite of foreign exchange (FX) continuing professional education (CPE), examples and events at FXCPE.com. Managing FX risk has become a higher priority for many firms for 2017 and it is now easier than ever to learn the fundamentals of currency risk management. Make this the year to reduce FX risk and reap rewards abroad by taking the FX Initiative for your international business today! Click here to start your FX Risk Management Training today! Cheers to your global organization's continued success in the new year, The FX Initiative Team support@fxinitiative.com March 13, 2017By FX Initiative FX Spot & Derivatives , Collars, Continuing Professional Education, CPE, Foreign Exchange, Forwards, Hedge, Options, Risk Management, FX 0 0 Comment
“If You Don't Invest in Risk Management…” “If you don’t invest in risk-management, it doesn’t matter what business you’re in, it’s a risky business.” This quote from Gary Cohn, the current Director of the National Economic Council and the former Chief Operating Officer of Goldman Sachs, highlights the important role risk management plays in achieving business success. When it comes to international business, the reward of expanding into new markets and capturing greater profits tends to be the primary focus. However, managing risk, and in particular, foreign exchange risk, is an equally important endeavor when venturing abroad, because if not managed properly, rewards can be diminished. The following introduction video to the "FX Risk Management" course addresses the two main learning objectives that are covered throughout this highly informative hour long educational program, which include (1) to recognize the role personnel, operations, and resources play in the establishment of a foreign exchange risk management program and (2) to explore the nine essential components of a comprehensive formal foreign exchange risk management policy. Want full access? Click to subscribe today! If you are interested in learning more about managing currency risk, sign up for our Foreign Exchange Risk Management Training today and access our complete suite of foreign exchange (FX) continuing professional education (CPE), examples and events at FXCPE.com. Managing FX risk has become a higher priority for many firms for 2017 and it is now easier than ever to learn the fundamentals of currency risk management. Make this the year to reduce FX risk and reap rewards abroad by taking the FX Initiative for your international business today! Click here to start your FX Risk Management Training today! Cheers to your global organization's continued success in the new year, The FX Initiative Team support@fxinitiative.com March 6, 2017By FX Initiative FX Risk Management , Continuing Professional Education, CPE, Currency, Foreign Exchange, Gary Cohn, Goldman Sachs, Management, Operations, Personnel, Resources, Risk, FX, Policy 0 0 Comment
Learn Where to Look for FX Risks Have you wondered where to look for FX risks? Identifying foreign exchange risk exposures across the enterprise becomes much easier when you know where to look in the financial statements. Some exposures like booked receivables are highly visible, while other exposures such as forecasted revenues are not. To help understand the different FX risk types and identify their impact on the financial statements and cash flows, FX Initiative's "FX Risk Exposures" course is designed to assist global firms with identifying common foreign exchange risk exposures and assessing their firm’s overall foreign exchange risk profile. The following introduction video to the "FX Risk Exposures" course addresses the four main learning objectives that are covered in detail throughout this highly informative hour long educational program. We'll define 6 key terms for assessing a firm’s foreign exchange risk profile, and identify the 3 different types of FX risk. Additionally, we'll explore the concept of Foreign Exchange Transaction Risk and recognize its impact on cash flows and the financial statements, as well as explore the concept of Foreign Exchange Translation Risk and discover how the accounting consolidation process applies to foreign subsidiaries. Want full access? Click to subscribe today! If you are interested in learning more about currency risk, sign up for our Foreign Exchange Risk Management Training today and access our complete suite of foreign exchange (FX) continuing professional education (CPE), examples and events at FXCPE.com. Managing FX risk has become a higher priority for many firms for 2017 and it is now easier than ever to learn the fundamentals of currency risk management. Make this the year to reduce FX risk and reap rewards abroad by taking the FX Initiative for your international business today! Click here to start your FX Risk Management Training today! Cheers to your global organization's continued success in the new year, The FX Initiative Team support@fxinitiative.com February 27, 2017By FX Initiative FX Risk Exposures Assess, Continuing Professional Education, CPE, Expsoures, Identifying, Profile, Risk, Where to look, Currency, Foreign Exchange, Management 0 0 Comment
Explore How the $5+ Trillion FX Market Works Are you curious how the $5+ Trillion foreign exchange (FX) market works? FX Initiative's FX Market Overview course is packed with valuable information and unique insights to get you up to speed on the fundamentals of the foreign exchange market. This 1 hour video program is eligible for continuing professional education (CPE) credit and covers the following 4 learning objectives in detail: Explore the concepts of Economic Globalization and International Trade. Discover how the foreign exchange market is evolving and how it operates. Identify the four main categories of foreign exchange market participants. Recognize how supply and demand impacts foreign exchange rates and forecasting. The following 5 minute introduction video from FX Initiative’s newly released course titled “FX Market Overview" shares the knowledge needed to understand the fundamentals of the foreign exchange market and to navigate information in a more efficient and effective manner in pursuit of accomplishing international business objectives. Want full access? Click to subscribe today! If you found this information insightful, become a FX Initiative subscriber today and access our complete suite of foreign exchange (FX) continuing professional education (CPE), examples and events at FXCPE.com. Managing FX risk has become a higher priority for many firms for 2017 and it is now easier than ever to learn the fundamentals of currency risk management. Make this the year to reduce FX risk and reap rewards abroad by taking the FX Initiative for your international business today! Click here to subscribe > Cheers to your global organization's continued success in the new year, The FX Initiative Team support@fxinitiative.com February 20, 2017By FX Initiative FX Market Overview , Continuing Professional Education, CPE, Currency, Foreign Exchange, Management, Market, FX, Risk 0 0 Comment
Learn How to Take the FX Initiative Did you know? Fortune 500 companies are holding more than 2 trillion dollars overseas. That’s a lot of money! Some may think there’s tons of U.S. dollars abroad. The truth is...this money is foreign currency from company revenues, expenses, receivables, payables, assets, liabilities, and equity. That’s a lot of foreign currency! And a lot of currency risk! Global companies face questions of how to manage currency risk? How to draft a FX risk policy? Where to look for FX risk exposures? What currency risks to hedge and how? Which strategies meet FX hedge objectives? What are the economics? How to do FX accounting? That's a lot of questions! It's time to take the FX Initiative! FX Initiative's foreign exchange risk management training starts with watching our online video series about: Foreign Exchange (FX) Market Overview FX Risk Exposures FX Risk Management FX Spot & Derivatives Hedging FX Transactions Hedging Foreign Subsidiaries Then, review and test with quizzes and CPE exams. And reinforce learning using real examples with our: Currency Code Locator FX Risk Policy Drafter FX Derivative Speculator FX Transaction Simulator FX Subsidiary Consolidator FX Initiative training is available 24/7 365 to help you with FX risk policies, FX accounting, FX hedging strategies, and FX risk management. Are you ready to manage FX risk? Take the FX Initiative by subscribing today! Want to take the FX Initiative? Click to subscribe today! If you found this information insightful, become a FX Initiative subscriber today and access our complete suite of foreign exchange (FX) continuing professional education (CPE), examples and events at FXCPE.com. Managing FX risk has become a higher priority for many firms for 2017 and it is now easier than ever to learn the fundamentals of currency risk management. Make this the year to reduce FX risk and reap rewards abroad by taking the FX Initiative for your international business today! Click here to subscribe > Cheers to your global organization's continued success in the new year, The FX Initiative Team support@fxinitiative.com February 13, 2017By FX Initiative General Continuing Professional Education, Currency, FX, Initiative, Management, Risk, CPE, Foreign Exchange, How to 0 0 Comment
FX Forward Contract Fundamentals Forward contracts are by far the most prevalent foreign exchange derivative instrument used in the marketplace. A forward secures the value of an underlying position by providing 100% protection against unfavorable market moves beyond the “all in” forward rate, while giving up 100% of the participation in favorable market moves. A forward contract will almost always finish in either an asset or liability position at maturity depending on the ending spot rate. Forwards are easy to understand, widely available, and require no upfront premium. Forwards are particularly attractive for firms that seek a symmetrical payoff profile, where the hedge achieves largely equal and offsetting gains and losses related to the underlying foreign exchange exposure. Forward contracts involve the exchange of two currencies at an agreed upon rate on the date of the contract for settlement on a date more than two business days in the future. Forward contracts include both deliverable and non-deliverable forwards, which are also known as NDFs. A non-deliverable forward (NDF) is a cash-settled forward contract on a restricted or non-convertible foreign currency, as opposed to a deliverable forward which has the option of cash settlement or delivery of the currency. According to the Bank for International Settlements 2013 Triennial Central Bank Survey, daily trading volume in forward contracts reached $680 billion in April of 2013, accounting for 13% of total FX market volume, which is the highest percentage on record since the survey began. To explain the fundamentals of FX forward contracts, the following 6 minute video clip from FX Initiative’s newly released course titled “FX Spot & Derivatives” discusses the basic concepts of forward contracts, including forward points, the forward point equation, and the “all in” forward rate. Want full access? Click to subscribe today! If you found this information insightful, become a FX Initiative subscriber today and access our complete suite of foreign exchange (FX) continuing professional education (CPE), examples and events at FXCPE.com. Managing FX risk has become a higher priority for many firms for 2017 and it is now easier than ever to learn the fundamentals of currency risk management. Make this the year to reduce FX risk and reap rewards abroad by taking the FX Initiative for your international business today! Click here to subscribe > Cheers to your global organization's continued success in the new year, The FX Initiative Team support@fxinitiative.com February 6, 2017By FX Initiative FX Spot & Derivatives , Continuing Professional Education , CPE, Currency, Foreign Exchange, Forward Contracts, Hedging, Risk Management, Forward Points, FX 0 0 Comment
Identifying Direct vs. Indirect Currency Quoting Conventions It is evident that no one single world currency exists. There are over 180 currencies recognized as legal tender in circulation throughout the world. The most widely used list of currencies is known as ISO 4217, which is a standard published by the International Organization for Standardization or the ISO. The ISO is an international standard-setting body composed of representatives from various national standards organizations, and the ISO 4217 currency codes shown in FX Initiative’s Currency Code Locator are used in banking and business globally. The ISO 4217 currency codes are also commonly used when publishing exchange rate quotes in newspapers or banks to help delineate the different currencies instead of translating currency names or using ambiguous currency symbols. The most traded pairs of currencies in the world are called “The Majors”, and they include the euro, British pound sterling, Australian dollar, New Zealand dollar, United States dollar, Canadian dollar, Swiss franc, and Japanese yen. While someone new to the foreign exchange market might view published FX quotes similar to a stock or commodity price quotes, it is important to understand that foreign currencies differ because they are quoted in pairs using one of two currency quoting conventions, (1) a direct quote and (2) an indirect quote. A direct quote, also known as an American quote, is the domestic currency per unit of the foreign currency, and an indirect quote, also known as a European quote, is the foreign currency per unit of the domestic currency. Since currencies are always quoted in pairs, a currency quote will contain one currency on the left side of the quote known as the base currency, a forward slash in the center, and the other currency on the right side of the forward slash is known as the terms currency or the counter currency. The base currency is always equal to one unit, and the terms currency represents the number of units that equal one base unit of currency. To illustrate the concept of identifying direct vs. indirect currency quoting conventions visually, the following 6 minute video clip from FX Initiative’s newly released course titled “FX Market Overview” explains how market participants can understand and interpret the two different foreign currency quoting conventions appropriately. Want full access? Click to subscribe today! If you found this information insightful, become a FX Initiative subscriber today and access our complete suite of foreign exchange (FX) continuing professional education (CPE), examples and events at FXCPE.com. Managing FX risk has become a higher priority for many firms for 2017 and it is now easier than ever to learn the fundamentals of currency risk management. Make this the year to reduce FX risk and reap rewards abroad by taking the FX Initiative for your international business today! Click here to subscribe > Cheers to your global organization's continued success in the new year, The FX Initiative Team support@fxinitiative.com January 30, 2017By FX Initiative FX Market Overview CPE, Currency, Currency Code Locator, Direct, Indirect, ISO 4217, Continuing Professional Education, Convention, Foreign Exchange, Quote, Rates 0 0 Comment
Watch How Time Zones Impact Global FX Trading The enormity of the foreign exchange market is due to the fact that anytime foreign goods or services are bought or sold or international investment is made, companies, governments, and individuals may need to purchase the currency of the country or region in which they are conducting business. The foreign exchange market is decentralized, meaning there is no central marketplace where trading occurs. Participants in the foreign exchange market come from all over the world and trade at different times for different purposes. This worldwide network is connected through technology, and the time-zone differences between trading centers create a 24-hour market for FX trading. Using the data from the Bank for International Settlements 2013 Triennial Central Bank Survey, the following 5 minute video clip from FX Initiative’s newly released course titled “FX Market Overview” identifies the 3 major FX trading centers around the world and focuses on how the shift in time zones creates a rhythm in FX trading, with greater liquidity and volatility at certain times of the day. Want full access? Click to subscribe today! If you found this information insightful, become a FX Initiative subscriber today and access our complete suite of foreign exchange (FX) continuing professional education (CPE), examples and events at FXCPE.com. Managing FX risk has become a higher priority for many firms for 2017 and it is now easier than ever to learn the fundamentals of currency risk management. Make this the year to reduce FX risk and reap rewards abroad by taking the FX Initiative for your international business today! Click here to subscribe > Cheers to your global organization's continued success in the new year, The FX Initiative Team support@fxinitiative.com January 23, 2017By FX Initiative FX Market Overview American, Asian, Continuing Professional Education, Currency, European, FX, Liquidity, Market, Risk Management, Time Zones, 24/7, CPE, Foreign Exchange, Trading, Volume 0 0 Comment
Apple's FX Risk Management Plan Foreign exchange risk management involves identifying, analyzing, and prioritizing various foreign currency exposures, and developing and implementing a coordinated and systematic plan that utilizes company resources efficiently and effectively to mitigate and optimize FX risk. The degree to which companies implement adequate foreign exchange risk management practices can vary substantially, from not managing the risk at all to engaging in robust hedging activities, and as a result, the impact on the bottom line can vary widely across organizations. When it comes international business success, Apple is a global technology leader not only in terms of their product innovation but also in how they manage their foreign exchange risk exposures inherent in their worldwide operations. Looking at Apple’s 2015 Annual Report (Form 10-K), the following 4 minute video clip from FX Initiative's newly released course titled "FX Risk Management" reveals Apple's foreign exchange risk management plans. Want full access? Click to subscribe today! If you found this information insightful, become a FX Initiative subscriber today and access our complete suite of foreign exchange (FX) continuing professional education (CPE), examples and events at FXCPE.com. Managing FX risk has become a higher priority for many firms for 2017 and it is now easier than ever to learn the fundamentals of currency risk management. Make this the year to reduce FX risk and reap rewards abroad by taking the FX Initiative for your international business today! Click here to subscribe > Cheers to your global organization's continued success in the new year, The FX Initiative Team support@fxinitiative.com January 16, 2017By FX Initiative FX Risk Management 10-K, Continuing Professional Education, CPE, risk management, Risk Policy, Annual Report, Apple, Foreign exchange 0 0 Comment