The Real Costs Of Hedging In The Forward Exchange Market: An Empirical-Investigation
This paper empirically estimates the real costs of hedging in the forward exchange market. The real costs are defined to account for the differential between the forward rate and the future spot rate. If the forward rate was an unbiased predictor of the future spot rate, the real costs of hedging would be near zero in the long run. Yet, the real costs were often found to differ significantly from zero. These results carry important implications for firms engaged in international trade and finance.
Management International Review
Madura, Jeff, "The Real Costs Of Hedging In The Forward Exchange Market: An Empirical-Investigation" (1984). Faculty Bibliography 1980s. 313.