Currency Derivatives by Mark Susor

1. Compare and contrast forward and futures contracts. 2. How can currency futures be used by corporations? 3. How can currency futures be used by speculators? (Benedictine, 2012). According to Madura (2012); “A currency derivative is a contract whose price is partially derived from the value of the underlying currency that it represents.  Some individuals and financial firms take positions in currency derivatives to speculate on future exchange rate movements.  MNCs [Multinational Corporations] commonly take positions in currency derivatives to hedge their exposure to exchange rate risk” (p.123).