risk, liquidity risk and market risk. Market risk arises from currency risk, interest rate risk and fair value risk associated with investments etc. The company has a risk management program in place to monitor and actively manage such risks. In this report, our group will be focusing on the currency risk/ foreignexchange risk of the market risk.
The company operates primarily in Korean Won (KR
Exchange Market
a market for converting the currency of one country into that of another country
Exchange Rate
the rate at which one
currency is converted
into another
The Functions of the ForeignExchange Market
Currency Conversion
To convert the currency of one country
into that of another country
Insuring against ForeignExchange Risk
To prov
exchange rate)과 선물환율(forward exchange rate)간의 스왑(currency swap)을 통해서 환 위험을 회피하는 기능을 의미한다. 현물환율(spot exchange rate)이란 외환의 즉각적인 인도와 인수를 요하는 거래로써 매 순간 실제시장에서 거래되는 환율의 시세이다. 현물환율은 그 순간의 외국환에 대한 수요와 공급에 의해 결
currencies, it exposes itself to risk. The risk arises because currencies may move in relation to each other. If a firm is buying and selling in different currencies, then revenue and costs can move upwards or downwards as exchange rates between currencies change. If a firm has borrowed funds in a different currency, the repayments on the debt could change or, if the firm has invested overseas, t
currencies and narrowing credit spreads led to a fall in the fair value of outstanding derivative contracts.
Before the crisis the loans and advances to banks increased very much between 2005 and 2006 as a consequence of the stability of the credit quality. However, during the crisis there was a 29% decline in loans and advances to banks that occurred mainly in Hong Kong and the UK where Bal