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Currency Hedging Effect on share price?

This topic has 3 replies, 2 voices, and was last updated 8 years ago by John Moffat.

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May 30, 2014 at 6:53 pm #171972
sameed
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Hi John, can you kindly explain me briefly that if a company does or does not hedge it’s foreign currency risk, can it have an effect on share price of a company?

And can we roundfoff 1.645 standard deviations away fro mean to just 1.6 as given in tables?

thanks.
May 31, 2014 at 11:45 am #172101
John Moffat
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If a company does not hedge the risk, then it does make the company more risky. This can result in the shareholders requiring a higher return because of the risk, and therefore a lower share price.

Yes – no problem rounding off 1.645, but round it to 1.64 (not to 1.6) because you can look up standard deviations to two decimal places on the tables.
May 31, 2014 at 2:14 pm #172122
sameed
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Ok thanks a lot
May 31, 2014 at 5:37 pm #172173
John Moffat
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You are welcome 🙂
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